•-^ 


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COMMUNICATION 


FROM     THE 


Comptroller  of  the  City  of;  New  York 

™     THE  ViU^'*/^VAfei^5_ 

Assembly  Committee  on  Cities,  "^Ov  -^^-^t.- 


RELATIVE    TO 


PROPOSED      AMENDMENTS 


TO     THE 


Greater  New  York  Charter 

to  remedy  certain  evils,  including  the  prac- 
TICE   OF    THE    confession    OF    JUDGMENTS 
BY  THE  CORPORATION  COUNSEL. 


FEBRUARY    20,    1900. 


City  of  New  York, 

DEPARTMENT  OF  FINANCE. 

Comptroller's  Office. 

February  20tli,  1900. 

To  the  Committee  on  Cities  of  the  Assembly  : 

Gen'I'lemen  : — On  February  IH,  ]900,  I  had  the 
honor  of  appearing  before  your  Committee  in  sup- 
port of  two  bills  introduced  by  Mr.  Fallows  to 
amend,  respectively,  sections  255  and  149  of  the 
Greater  New  York  Charter.  The  first  bill  (Assem- 
bly No.  742)  affects  the  powers  and  duties  of  the 
Law  Department,  and  the  second  (Assembly  No. 
741)  those  of  the  Department  of  Finance. 

It  was  necessarily  impracticable  within  the  brief 
limits  of  that  hearing  to  elucidate  fully  the  rea- 
sons which  make  this  legislation  of  vital  import- 
ance, and  I  desire,  therefore,  In  this  communica- 
tion to  explain  why  it  is  of  so  urgent  a  character 
as  to  render  it  inadvisable  to  postpone  action  by 
referring  the  proposed  Charter  amendments  to  the 
Charter  Revision  Commission  which  it  is  proposed 
to  create  at  this  session  of  the  Legislature. 


I. 

assembly  bill  no.  742. 

This  bill  (See  Appendix  I)  amends  Section  255 
of  the  Charter,  relating  to  the  Law  Department  in 
two  particulars : 

(a.)  By  requiring  the  ai)proval  of  the  Board  of 
Estimate  and  Apportionment  before  proceedings 
shall  be  instituted  by  the  Corporation  Counsel  to 


acquire  title  to  real  estate  by  condemnation  pro- 
ceedings, except  for  the  openino;  of  streets. 

(6.)  By  prohibiting  the  Corpoi-ation  Counsel 
from  offering  judgment  in  favor  of  or  against  the 
City  of  Xe\v  York  without  the  previous  written 
approval  of  the  Comptroller,  and  in  case  of  a  money 
judgment  exceeding  $10,000,  or  relief  other  than 
in  the  nature  of  a  money  judgment,  by  requiring 
also  the  approval  of  the  Mayor. 

(rt.)  As  to  the  first  mentioned  amendment,  relat- 
ing to  condemnation  proceedings  : 

It  has  been  the  theory  of  our  municipal  govern- 
ment for  many  years  that  the  control  of  the  City's 
liabilities,  expenditures  and  obligations  should  be 
vested  in  one  central  and  responsible  body — the 
Board  of  Estimate  and  Ajiportionment.  The  neces- 
sity for  some  such  control  is  so  self-evident  as  to 
require  no  argument. 

The  money  of  the  taxpayers  is  almost  wholly  ex- 
pended from  two  sources :  (1)  from  taxation,  and 
(2)  from  the  proceeds  of  sales  of  bonds.  In  the 
making  of  the  annual  budget  to  be  raised  by  taxa- 
tion the  Board  of  Estimate  and  Apportionment  is, 
subject  to  certain  important  legislative  restrictions, 
substantially  free  to  determine  the  amounts  of 
departmental  appropriations  upon  which  tlie  an- 
nual burden  of  taxation  dejjends  (Charter,  Section 
226).  In  the  determination  of  the  extent  to  which 
the  City  shall  become  indebted  bj'  the  issue  of 
bonds  for  public  improvements  the  Board  of  Es- 
timate and  Apportionment  is  also  supposed  to 
possess  similar  powers  {id..  Sections  48,  169,  174, 
181,  184,  &c..  &c.),  although  for  a  few  pixrposes 
the  Commissioners  of  the  Sinking  Fund  are  vested 
with  these  powers  {id..  Sections  169,  180). 

As  a  matter  of  fact,  this  theory  of  law  is  not 
realized  in  practice  for  the  following  reasons  : 

(1.)  By  far  the  larger  part  of  the  annual  budget 


is  made  up  of  the  items  of  State  taxes, Redemption 
of  and  Interest  on  tlie  City  debt,  and  Sinldng  Fund 
Installments,  which  are  regulated  by  statute  and 
necessarily  beyond  the  control  of  the  local  author- 
ities, and  the  salaries  of  such  graded  employees  as 
policemen,  lirenien,  school  teachers  and  members 
of  the  street  cleaning  force,  whose  salaries  are  fixed 
by  express  legislative  enactments.  It  is  not  my 
intention  to  suggest  any  modification  of  existing 
laws  on  this  subject,  if,  indeed,  such  modification 
be  in  any  way  practicable. 

(2.)  In  regard  to  the  issue  of  bonds  the  Board  of 
Estimate  and  Apportionment  is  deprived  of  its 
legitimate  authority  owing  to  the  manner  in  which 
the  City  is  obligated  to  pay  for  lands  acquired  by 
the  Corporation  Counsel  in  behalf  of  the  several 
subordinate  administrative  branches  of  the  city 
government  without  the  sanction  or  approval  of 
that  Board.  In  order  to  aiipreciate  the  constant, 
enormous,  unliquidated  liability  of  the  city  for 
lands  acquired  in  condemnation  proceediugs,  per- 
mit me  to  refer  to  the  fact  that  at  the  date  of  con- 
solidation the  City  of  New  York  had  acquired  title 
to  and  taken  possession  of  land  valued  at  nearly 
$88,000,000,  which  had  not  been  paid  for  because 
the  awards  had  not  been  confirmed,  and  that  pro- 
ceedings were  pending  for  the  acquisition  of  addi- 
tional land  valued  at  over  $5,000,000,  the  title  to 
which  had  not  then  vested  in  the  city. 

As  to  nearly  all  of  these  liabilities  the  Board  of 
Estimate  and  Apportionment  of  the  City  of  New 
York.as  formerly  constituted, had  never  had  the  op- 
portunity of  granting  or  withholding  its  approval. 
The  liabilities  had  been  incurred  through  the  action 
of  city  departments  and  other  boards  of  the  city 
government  acting  independently,  and  it  was  only 
when  the  awards,  having  been  confirmed  by  the 
Supreme  Court,  became  payable,  that  the  Board  of 
Estimate  and  Apportionment  was  called  upon  to 
exercise  the  purely  ministerial  and  perfunctory 


fluty  of  autliorizing-  the  issue  of  bonds,  for  the 
failure  to  perform  which  that  board  could  have 
been  niandamused.  The  Department  of  Finance 
had  no  official  knowledge  of  these  liabilities,  and 
when  it  became  necessary  to  obtain  knowledge  of 
the  extent  thereof  that  knowledge  had  to  be  sought 
laboriously  and  with  difficulty  in  the  records  of 
other  departments. 

The  Greater  Xew  York  Charter  is  equally  de- 
ficient in  this  I'espect. 

In  order  to  understand  this  more  readily  it  may 
be  well  to  give  concrete  illustrations. 

(1.)  The  Commissioner  of  Water  Supply  desires 
(as  he  has  recently)  to  acquire  a  large  and  expen- 
sive tract  of  land  to  increase  the  supply  of  water. 
He  prepares  maps  which  receive  the  approval  of 
the  Board  of  Public  Improvements  (Section  486). 
These  maps  are  filed  by  the  Corporation  Counsel 
(Section  489),  who  shall  thereupon  apply  for  the  ap- 
pointment of  Commissioners  of  Appraisal  (Section 
490),  who,  upon  appointment,  duly  file  their  oaths 
of  office  (Section  493),  whereupon  the  "City  of 
New  York  shall  be  and  become  seized  in  fee  of 
all  those  parcels  of  real  estate  which  are  shown 
on  the  said  map  hereinbefore  referred  to  "  (Section 
494).  It  is  at  this  time  that  the  city  becomes 
liable  or  "indebted"  for  the  land  taken,  yet 
neither  the  Board  of  Estimate  and  Apportionment 
nor  the  Comptroller  is  officially  advised  of  this 
fact  until,  perhaps,  years  afterwards,  when,  the 
awards  having  been  made  and  confirmed  by  the 
Supreme  Court  these  officials  are  required  (Sections 
509,  510,  169)  to  authorize  {sic)  the  issue  of  the 
necessary  bonds. 

(2.)  The  Board  of  Public  Improvements  deter- 
mines to  lay  out  a  new  i^ark  (Section  436),  the 
whole  cost  of  which  is  to  be  borne  by  the  city  of 
New  York,  and  directs  the  Corporation  Counsel  to 
begin  condemnation  proceedings  for  that  purjiose 
(Section  970).     Said  Board  also  by  resolution  vests 


5 

the  title  to  the  lancls  in  the  city  prior  to  confirma- 
tion of  the  report  of  the  Commissioners  (Section 
990)  at  whicli  time  tlie  city  becomes  liable  or  "  in- 
debted.'" When  the  awards  are  payable  and  the 
necessary  bonds  must  be  issued  the  Board  of  Esti- 
mate and  Apportionment  is  apprised  for  the  first 
time  of  the  liabilities  thus  incurred. 

(3.)  The  Board  of  Docks  directs  the  Corporation 
Counsel  to  acquire  title  to  water-front  property 
by  condemnation  proceedings  (Section  822)  and  it 
becomes  the  duty  of  that  official  to  proceed  in  ac- 
cordance with  his  instructions.  The  value  of  the 
land  may  be  ten  or  twenty  millions,  but  if  he  asks 
any  questions  as  to  the  financial  ability 
of  the  city  to  pay  for  it,  there  is  nowhere  in  the 
law  any  provision  requiring  this  perfectly  proper 
curiosity  to  be  satisfied.  There  is  a  certain 
responsibility  on  the  Board  of  Docks  that 
the  bonds  issued  in  behalf  of  the  Depart- 
ment shall  not  exceed  $3,000,000  per  annum 
(Section  180),  but  as  it  would  be  uncertain  when 
the  awards  would  become  payable  it  would  be  a 
difl[iciilt  matter  to  show  that  the  Board  were  in- 
directly evading  this  provision  of  law.  If,  on  the 
other  hand,  after  the  property  had  been  taken  by 
the  city,  it  should  require  an  issue  of  bonds  in  ex- 
cess of  $3,000,000  per  annum  to  pay  the  awards  to 
the  proj)erty  owners,  it  is  doubtful  whether  that 
limitation  would  be  respected  by  the  Courts  at  the 
cost  of  allowing  a  person's  property  to  be  taken 
withoi^t  prompt  compensation. 

The  Board  of  Estimate  and  Apportionment  has 
no  voice  and  no  official  knowledge  of  the  enormous 
liabilities  which  can  thus  be  incurred. 

These  examples  might  be  multiplied  almost  in- 
definitely, for  the  truth  is  that  there  is  pi'actically 
no  check  by  the  responsible  financial  officers  of  the 
city  on  the  liabilities  for  land  damage  which  the 
several  departments  incur.  Even  the  Corporation 
Counsel  cannot  check  them  except  by  an  abuse  of 


6 

power  ;  for  he  is  vested  with  no  discretion  in  re- 
gard to  nndertakinii'  the  proceedings.  When  it  is 
borne  in  mind  that  it  is  for  awards  for  lands  that 
the  proceeds  of  bonds  are  chiefly  needed  (by  far 
the  larger  part  of  liond  sales  being  applied  for  this 
purpose)  it  will  be  seen  how  loose  and  fatally  de- 
fective the  city's  financial  system  is  in  this  respect. 
An  exception  has  been  made  in  the  amendment 
relating  to  the  opening  of  streets,  because  in  nearly 
all  cases  the  awards  for  this  purpose  are  offset  by 
assessments  on  the  property  benefited  by  the  open- 
ings and  the  city's  obligations  are  therefore  merely 
temporary. 


(b.)  As  to  the  second  amendment,  relating  to  con- 
fessions of  judgment  by  the  corporation  counsel. 

The  provision  of  law  in  tlie  Greater  New  York 
Charter  (§  149)  regulating  the  settlement  and  ad- 
justment of  claims  against  or  in  favor  of  the  city  is 
identical  in  language  with  that  contained  in  the 
New  York  City  Consolidation  Act  of  1882  (§  123). 

It  reads  as  follows  : 

"  He  (the  Comptroller)  shall  settle  and  adjust  all 
"  claims  in  favor  of  or  against  the  corporation,  and 
"  all  accounts  in  which  the  corporation  is  con- 
"  cerned  as  debtor  or  creditor." 

This  is  the  only  specific  grant  of  power  on  the 
subject  contained  in  either  the  present  Charter  or 
the  former  Consolidation  Act. 

Nevertheless  every  Corporation  Counsel  has, 
since  1876,  maintained  that  as  soon  as  a  claim  was 
put  in  suit  he  possessed  the  power  to  settle,  ad- 
just and  compromise  the  same  as  an  implied  power 
incidental  to  the  conduct  of  the  city's  law  busi- 
ness. 

In  1876,  when  this  controversy  first  arose  be- 
tween Hon.  Andrew  H.  Green,  then  Comptroller, 
and  Hon.  W.  C.  Whitney,  then  Corporation  Coun- 
sel, opinions  were  obtained  from  Hon.  W.  M. 
Evarts  and  Hon.  George  T.  Curtis,  that  such  an 
implied  power  existed.  Mr.  Whitney's  position, 
however,  was  quite  moderate  as  compared  with 
that  of  the  present  Corporation  Counsel. 

Mr.  Whitney  apparently  was  satisfied  with  the 
contention  that  when  the  adjiastment  of  a  claim  in- 
volved only  a  question  of  law  he  should  be  free  to 
offer  judgment,  as,  for  example,  if  the  facts,  if  ad- 
mitted or  proved,  would  not  constitute  a  legal  de- 
fense. 

This  is  apparent  from  the  following  extract  from 
Mr.  Whitney's  letter  to  Comptroller  Green  : 

"All  cases  in  which  we  have  failed  to  act  har- 
"  moniously  with  each  other,  and  in  which  between 


8 

"  us  both  the  City  suffered,  are  cases  involting 
"  qtiestions  of  law  only  ;  for,  since  my  accession 
"  to  office,  I  have  never  failed  to  assume  as  correct 
"  all  stalemeiits  of  fact  made  by  any  administra- 
"  tite  department  icith  reyard  to  ichicli  I  deem 
"  myself  to  Jiace  no  discretion,  whatever  my  opin- 
"  ion  may  be  in  regard  to  the  probability  of  sus- 
"  taining  the  allegation  of  fact  made  by  such 
"  department." 

Each  successive  Comptroller  and  Corporation 
Counsel  has  maintained  stoutly  his  own  view  of 
the  law,  but,  prior  to  consolidation,  the  contro- 
versy was  never  submitted  to  the  courts  for  adjudi- 
cation, and  never  became  a  practical  matter  because 
these  officers  have  always  approached  each  other  in 
a  spirit  of  compromise  and  harmony  designed  to 
prevent  unseemly  contention  and  promote  the 
proper  protection  of  the  city's  interests.  On  the 
one  hand,  no  Comptroller  has  objected  to  the  set- 
tlement by  the  Corporation  Coun.sel  of  claims  which 
involved  only  questions  of  law,  while,  on  the  other 
hand,  the  settlement  of  claims  involving  questions 
of  fact  and  the  exercise  of  business  jude:ment  and 
discretion,  have,  with  substantial  uniformity,  been 
submitted  to  the  Comptroller. 

In  the  early  part  of  1898  thejiresent  Comptroller 
endeavored  to  continue  and  perpetuate  this  amicable 
and  efficacious  modus  vivendi  (see  letter,  Appendix 
III).  The  reply  of  the  Corporation  Counsel  (see 
Appendix  IV)  shows  the  spirit  in  which  this  ad- 
vance was  met.  It  exhibited  a  change  of  attitude 
which  was  apparently  irreconcilable. 

The  issue  thus  raised  seemed  of  paramount  im- 
poi'tance. 

It  is  apparent  that  if  a  claimant,  after  failing  to 
secure  what  he  legards  as  a  satisfactory  settlement 
from  the  Comptroller,  can,  by  the  simple  process  of 
serving  a  summons,  take  his  claim  over  to  the  office 
of  the  Corporation  Counsel  and  obtain  a  settlement 
more  advantageous  to  his  interests,  the  Law  De- 
partment takes   the  place   of   the   Department  of 


9 

Finance  as  the  Auditing  lirancii  of  the  city  govern- 
ment. 

Such  a  result  was  seen  to  be  inevitable,  and  the 
result  foreseen  has  actually  come  to  pass. 

Consider  for  a  moment  tlie  revolutionary  nature 
of  this  change  as  ajjplied  to  the  scheme  of  govern- 
ment provided  by  the  Charter. 

1.  The  Comptroller  is  the  only  official  to  whom 
the  law  nuvkes  a  specilic  grant  of  power  to  settle 
and  adjust  claims.  The  alleged  power  of  the  Cor- 
poration Counsel  has  to  be  elaborately  implied 
from  the  duty  of  having  "charge  and  conduct  of 
all  the  law  business  of  the  corporation  and  its  de- 
partments and  boards." 

2.  An  attorney  possesses  no  power  to  make  an 
offer  of  judgment  in  behalf  of  a  private  client  with- 
out the  latter's  consent.  In  the  case  of  a  munici- 
pal corporation,  like  the  City  of  NeAv  York,  which 
can  act  only  through  its  duly  authorized  repre- 
sentatives— in  this  case  the  Comptroller — such 
consent  should  also  be  obtained. 

3.  The  Charter  provides  tliat  "the  finance  de- 
partment shall  have  control  of  the  fiscal  concerns 
of  the  corx)oration."  Yet  it  is  claimed  that  the 
mere  service  of  a  summons  will  transfer  that  con- 
trol to  the  Law  Department. 

4.  The  Comptroller  is  an  officer  elected  by  the 
people ;  the  Corporation  Counsel  is  appointed  by 
the  Mayor. 

5.  The  Comptroller  gives  an  official  bond  of 
$200,000  ;  the  Corporation  Counsel   one  of  $5,000. 

6.  Nothing  is  clearer  than  that  the  Comptroller, 
at  least  before  suit  brought,  is  vested  with  abso- 
lute discretion,  sul)ject  to  his  responsibility  as  an 
official  in  the  settlement  and  adjustment  of  claims 
for  and  against  the  City. 

He  certainly  was  not  intended  to  be  a  mere  au- 
tomaton or  machine. 


10 

But  in  what  matters  is  dist-retiou  of  the  greatest 
importance  ? 

Certainly  not  in  iincontested  chdms— in  matters 
where  the  rights  of  tlie  City  are  perfectly  clear  and 
defined. 

In  such  matters  no  discretion  is  necessary.  Tlie 
payment  of  a  just  debt  involves  nothing  but  the 
drawing  of  a  warrant— a  purely  ministerial  act — 
wliere  the  facts  are  certain  and  well  known. 

On  the  other  hand,  it  is  precisely  in  questions 
where  the  City's  rights  are  contested  and  are 
doubtful  that  discretion  is  essential. 

It  is  in  complicated  and  not  in  clear  financial 
matters  that  the  highest  intelligence  is  needed  for 
the  protection  of  the  vast  interests  belonging  to 
the  municipality. 

And  yet  the  contention  of  the  Corporation  Coun- 
sel, if  correct,  would  result  in  entirely  taking  that 
discretion  from  the  officer  in  whom  it  is  expressly 
vested  at  the  very  time  and  iinder  the  very  circum- 
stances when  its  exercise  becomes  of  the  greatest 
importance,  and  in  placing  it  solely  upon  the 
shoulders  of  another  officer,  concerning  whose 
powers  in  this  regard  the  statute  is  wholly  silent. 

And,  moreover,  it  must  be  kept  in  mind  that  the 
result  would  not  be  merely  a  transfer  of  that  dis 
cretiou,  but  would  be  to  vest  the  Corporation  Coun- 
sel with  the  ijowers  of  a  Court  of  Appeal  to  re- 
verse, annul  or  modify  the  discretion  which  the 
Comptroller  had  theretofore  exercised. 

In  other  words,  the  use  by  the  Comptroller  in 
the  rejection  of  a  claim  against  the  city  of  the  dis- 
cretion with  whicli  lie  is  expressly  vested  by  the 
Charter  would  result,  instead  of  rendering  his  dis- 
cretion effectual,  in  vesting  another  official  with 
full  and  unrestricted  power  to  undo  that  which  the 
Comptroller  had  purported  to  accomplish. 

7.  The  action  of  the  Comptroller  in  paying 
claims  against  the  city  is  carefully  hedged  about 
by  an  elaborate  system  of  checks ;  no  such  pro- 


11 

vision  is  made  for  the  Corporation  Counsel.  For 
example,  it  is  jirovided  (§  195)  that  no  warrant  for 
the  payment  of  the  city's  moneys  "  shall  be  signed 
by  the  Comptroller  or  countersigned  by  the  Mayor, 
except  upon  vouchers  for  the  expenditure  of  the 
amount  named  therein,  examined  and  allotced  by 
an.  axdifor  of  accoitnts,  approved  by  the  Comp- 
troller, and  filed  in  the  Department  of  Finance, 
except  ill  tin-  case  of  judgments.'''' 

This  last  exception  ought  to  be  conclusive  as  to 
the  intent  and  spirit  of  the  law.  Judgments  need 
not  he  audited  hg  an  auditor  of  accowds  hefore 
being  paid  by  the  Comptroller. 

Why  ?  Because  it  was  assumed  that  judgments 
would  come  to  the  Comptroller  for  payment  after  an 
audit  of  the  most  thorough  efficiency — the  trial  of 
an  action.  The  city  in  paying  a  judgment  might  be 
supposed  to  have  the  protection  of  a  Court,  and  its 
solemn  decision  based  upon  both  law  and  facts. 
Yet  in  the  last  two  years  not  one  judgment 
IN  ten  that  has  been  paid  out  of  the  city 

TREASURY  HAS  REPRESENTED  ANYTHING  BUT  THE 
SOLE,   UNCONTROLLED    AND  UNCHECKED    ACTION   OF 

AN  APPOINTIVE  OFFICER.  Where  judgment  is  en- 
tered by  consent  or  by  default  or  upon  offer  of 
judgment,  the  judicial  decree  represents  nothing 
but  the  acquiescence  of  the  defendant.  The 
Charter  names  the  Comptroller  as  the  officer  to  ac- 
quiesce in  behalf  of  the  city  and  under  these  cir- 
cumstances to  use  the  empty  "judgments"  of 
Courts  as  a  cover  for  the  audits  of  the  Corporation 
Counsel  is  a  prostitution  of  the  judiciary  system 
of  the  State. 

The  only  machinery-  for  audit  in  the  city  govern- 
ment provided  by  tlie  Charter  is  in  the  Depart- 
ment of  Finance— in  the  "Auditing  Bureau"  of 
that  department.  Section  151  larovides  that  this 
bureau  shall  have  such  "clerks  and  assistants, 
examiners,  engineers,  inspectors  and  employees  as 
the  Comx^troller  may  deem  necessary  and  proper." 


12 

The  Comptroller  lias  them ;  the  Corporation 
Counsel  has  not. 

In  view  of  these  considerations  reconrse  was  had 
to  the  Conrts. 

A  taxpayer's  action  was  brought  by  Mr.  Irving 
T.  Bush  with  the  view  of  obtaining  an  adjudica- 
tion. Mr.  Justice  Prior  at  Special  Term  rendered 
a  decisi(m  upholding  the  views  cf  the  Corporation 
Counsel.  It  lias  been  impossible  as  yet  to  secure 
a  review  of  this  decision  on  appeal. 

In  the  meantime,  however,  the  Corporation 
Counsel  himself  began  a  proceeding  to  set  aside 
judgments  confessed  by  his  predecessor  in  the  sum 
of  8700,000  in  favor  of  certain  aquediict  contractors 
whose  claims  had  previously  been  rejected  by  the 
Court  of  Appeals.  Neither  the  Comptroller  nor 
Mr.  BtisIi  wei-e  permitted  to  be  heard  in  tliis  pro- 
ceeding. The  Corporation  Counsel  in  liis  argument 
carefully  avoided  the  question  of  inherent  power, 
and,  as  a  result,  the  Appellate  Division  of  the  Su- 
preme Court  sustained  the  judgments  in  question 
on  the  assumption  of  fact,  that  Comptroller  Fitch 
had  acquiesced  in  the  settlement.  The  Court  di- 
vided three  to  two, the  minority  (^Judges  McLaugli- 
lin  and  Patterson)  holding  as  a  matter  of  fact  that 
"the  Comptroller  did  not  consent  to  the  settle- 
ment," and  then  decided  squarely  that  under  the 
circumstances  the  Corporation  Counsel  possessed 
no  power  to  make  such  an  offer  of  judgment. 

This  dissenting  opinion  being  the  only  opinion  of 
any  Appellate  Court  on  this  subject  is  printed  in 
full  hereafter,  and  particular  attention  is  called  to 
the  strong  expressions  contained  therein.  (See  Ap- 
pendix V.)  The  decision  of  the  Court  of  Appeals 
in  this  case  having  been  based  uiion  a  certificate 
from  the  Appellate  Division  containing  a  state- 
ment of  fact  (^believed  by  a  majority  of  the  Judges) 
that  the  Comptroller  acquiesced  in  the  settlement 
does  not,  of  course,  touch  upon  tlie  controversy  in 
question. 

It  would  seem,  therefore,  so  far  as  judicial  opiu- 


13 

ions  are  concerned,  that  ultimately  the  contention 
of  the  Comptroller  will  be  sustained  by  the  Apjjel- 
late  Courts.  But  such  a  result  can  be  hoped  for 
only  after  long  delays.  The  evil  complained  of 
should  be  relieved  at  once  by  appropriate  legisla- 
tion. If,  by  any  possibility  the  Court  of  Appeals 
should  decide  that  the  Corporation  Counsel  pos- 
sesses the  power  under  the  cover  of  legal  proceed- 
ings to  dispose  of  the  city's  property  without  let 
or  hindrance  the  law  should  be  amended.  '  If,  on 
the  other  hand,  the  decision  should  be  the  reverse 
that  decision  should  be  forestalled. 

In  the  arguments  made  l)y  the  Corporation 
Counsel  in  the  Bnsh  litigation  undue  stress  was 
placed  upon  the  contention  that  to  require  the  ap- 
proval of  any  other  official  for  offers  of  judgment 
would  interfere  with  and  delay  the  conduct  of  the 
city's  business.  This  argument  ignores  the  fact 
that  some  check  of  this  kind  is  met  with  in  the 
charters  of  nearly  all  large  cities,  and  that  in  the 
ordinary  routine  of  the  business  of  the  Department 
of  Finance  thousands  of  vouchers  are  submitted  by 
the  Comptroller  to  the  Corporation  Counsel  for 
advice,  on  account  of  which  the  latter  has  never 
been  heard  to  complain  that  the  city's  business  has 
been  delayed. 

In  private  litigation  the  fact  that  the  approval 
of  the  client  is  necessary  to  a  compromise  of  the 
case  has  never  been  found  to  interfere  in  the  slight- 
est degree  with  the  efficiency  of  the  services  per- 
formed by  the  attorneys.  The  client  is  absolutely 
unable,  even  should  he  be  desirious,  of  directing 
the  attorney  in  matters  of.  law.  He  is,  how- 
ever, perfectly  able  to  understand  the  con- 
clusion which  will  follow  from  the  settling  of  or 
omission  to  settle  his  rights,  and  when  this  ques- 
tion arises  there  is  no  reason  whatever  why  it 
should  not  be  ijresented  to  the  client  by  the  attor- 
ney, together  with  the  advice  of  the  latter  as  to 
those   matters  wherein   he  is  particularly  qualified 


14 

to  advise,  thus  subjecting  the  question  to  the  in 
spection  of  two  minds  instead  of  one. 

The  same  is  true  as  to  a  municiiKil  rorpora- 
tion. 

I  venture  to  say  that  if  the  power  of  the  Comp- 
troller, as  herein  claimed,  is  fixed  and  limited  be- 
yond controversy,  there  will  be  no  greater  danger 
of  any  detriment  to  the  city's  interests  than  there 
Avoiild  be  in  the  case  of  a  private  client,  and.  on 
the  contrary^  that  the  necessity  tchich  wilt  thus 
arise  f 07-  a  coiisultafio/i  between  two  of  the  chief 
officers  of  the  municipality  in  matters  of  such  im- 
portance as  the  city's  rights  is  muc7i  better  calcu- 
lated to  protect  the  city's  rights  than  would  be  the 
case  if  a  power  of  such  vast  and  far-reaching  im- 
portance be  left  solely  to  the  control  of  the  legal 
adoiser. 


15 
II. 

Assembly  Bill  No.  741. 

This  bill  (see  Appendix  II)  amends  Section  149 
of  the  Charter,  relating  to  the  Department  of 
Finance  in  the  following  iiarticulars  : 

{a.)  By  enabling  the  Auditing  branch  of  the  city 
government  to  j)ass  upon  the  reasonableness  of 
liabilities  incurred  by  heads  of  departments  upon 
"  dei)artmental  orders" — i.  e.,  contracts  of  less 
than  $1,000  each  made  without  competition  among 
bidders. 

(6.)  By  providing  a  fund  out  of  which  claims 
settled  and  adjusted  by  the  Comptroller  under  the 
powers  which  he  now  possesses  by  law  may  be 
paid. 

(c.)  By  placing  in  the  hands  of  the  Board  of 
Estimate  and  Apportionment  control  over  the 
liabilities  to  be  incurred  for  local  improvements 
each  year  payable  from  the  Street  Improvement 
Fund. 

(a. )  In  regard  to  ike  first  amendment  relating 
to  ^'departmental  orders^ 

The  Auditing  Bureau  and  the  Comptroller  are 
popularly  supposed  to  possess  powers  under  the 
Charter  whicli  would  enable  them  in  the  audit  of 
bills,  to  check  extravagance  or  improvidence  on 
the  part  of  heads  of  departments  and  others 
authorized  to  incur  liability  in  behalf  of  the  city. 
This  popular  impression  is  erroneous.  Contracts 
exceeding  $1,000  in  amount  must  be  made  at 
public  letting  after  due  advertisement  and 
competition  as  provided  by  law.  Contracts 
of  less  than  this  amount,  however,  can 
be  made  without  competition.  There  has  always 
been  a  tendency  on  the  part  of  some  city  officials  to 
evade  the  provisions  of  law  requiring  public  letting 
of  contracts  by  dividing  the  orders  on  works  into 


16 

amounts  of  less  than  $1,000  each,  and  it  has  fre- 
quently happened  that  the  prices  agreed  to  by  de- 
partments have  been  excessive.  Sometimes  after 
investigation  by  the  Auditing  Bureau  this  luis  been 
admitted  by  the  heads  of  dej)artments  making  the 
contracts.  Nevertheless,  under  the  law  as  it  now 
stands,  it  has  been  held  that  the  agreement  made 
by  the  head  of  the  department  with  the  contractor, 
is  linal  and  conclusive,  and  that  the  Auditing  Bur- 
eau and  the  Comptroller  possess  no  power  to  reduce 
the  prices  charged.  Such  a  decision  was  rendered 
by  the  Supreme  Court  even  in  such  a  flagrant  in- 
stance as  the  Eagle  Safe  case  (see  Appendix  VII), 
wliere  it  was  held  that  the  action  of  the  Commis- 
sioner in  issuing  the  departmental  order  was  bind- 
ing upon  the  city  no  matter  how  excessive  tlie 
prices  charged  might  liave  been.  Under  these  cir- 
cumstances the  work  of  auditing  claims  becomes 
merely  perfunctory  and  might  as  well  be  performed 
by  an  automaton.  The  amendment  in  question 
enables  the  Comptroller  to  reduce  excessive  claims 
while  offering  all  necessary  and  proper  protection 
to  the  legal  rights  of  the  contractor. 

(b. )  In  regard  to  the  second  amendment  creat- 
ing a  fund  out  of  lohicJi   claims  settled  and  ad- 
justed 1)1/  the  Comjjt roller  mag  be  paid. 

There  are  always  a  certain  number  of  claims  pre- 
sented to  the  Comptroller  for  settlement  each  year, 
the  justice  of  which  is  not  disputed,  but  which 
cannot  be  paid  by  the  Comptroller  because  no 
proper  fund  exists  out  of  which  payment  can  be 
made.  The  Comptroller  is  therefore  obliged  to  re- 
fuse payment  of  these  claims,  and  after  suit  is 
begun  it  is  the  practice  of  the  Corporation  Counsel 
to  offer  judgment,  whereupon  the  claims  in  ques- 
tion are  paid  out  of  the  judgment  fund,  whicli  can 
be  by  law  constantly  replenished  by  the  issue  of 
revenue  bonds.  The  existence  of  this  (^lass  of 
claims  offers  a  constant  excuse  for  the  practice  of 


17 

confessions  of  judguient  by  the  Corporation  Coun- 
sel, althougli  this  course  mulcts  the  city  in  con- 
siderable amounts  of  legal  costs  which  could  other- 
wise be  avoided.  The  amendment  in  question  es- 
tablishes a  "claim  fund"  on  the  same  basis  as 
the  judgment  fund  is  now  established  by  law,  and 
will  enal)le  the  Comptroller  to  pay  those  claims 
promptly,  thereby  rendering  prompt  justice  to  the 
city's  just  creditors  and  saving  a  considerable 
amount  annually  in  the  costs  of  legal  proceedings. 
It  is  not  believed  that  this  amendment  will  ex- 
cite opposition  from  any  quarter,  since  the  Corpor- 
ation counsel  has  caused  a  bill  to  be  introduced  in 
the  Legislature  intended  to  accomplish  the  same 
result. 

(c.)  In  regard  to  the  third  amendment  limiting 
the  liaJ>ilities  to  be  annually  incurred  in  behalf  of 
the  street  improvement  fund. 

The  liabilities  of  the  Street  Improvement 
Fund  arise  out  of  contracts  for  local  im- 
provements, the  costs  of  which  are  ulti- 
mately to  be  borne  by  assessments  upon 
the  ijroperty  benefitted.  The  assessment  lists, 
however,  are  not  transmitted  to  the  Board  of 
Assessors  until  after  each  work  is  completed,  and 
it  is  many  years  after  the  city  has  advanced  the 
money  to  contractors  in  payment  of  work  per- 
formed, before  the  assessments  are  collected  from 
the  iDroperty  owners.  The  result  is  that  assess- 
ment bonds  have  to  be  issued  to  replenish  this 
fund  in  very  large  amounts,  and  these  bonds 
technically  form  a  part  of  the  city's  funded  debt. 
Owing  no  doubt  to  the  fact  that  the  law  con- 
templates the  ultimate  reimbursement  of  the  city 
for  amounts  thus  advanced  in  Ijehalf  of  property 
owners,  an  exception  is  made  in  the  Charter  (§  149), 
in  favor  of  this  class  of  contracts  by  allowing  them 
to  be  made  in  unlimited  amounts  without  the 
necessity  of  certificates  by   the  Comptroller  that 


18 

funds  have  been  provided   to  meet  the  expense 
thereof. 

While  it  may  be  desirable  not  to  place  these  con- 
tracts on  the  same  footing  as  ordinary  contracts, 
the  whole  expense  of  which  is  borne  by  the  city,  it 
is,  nevertheless,  necessary  that  some  check  should 
be  established  wherebj^  the  city  might  not  be  com- 
pelled to  issue  assessment  bonds  in  excessive 
amounts  at  times  when  it  would  be  financially  im- 
possible or  undesirable  to  do  so.  The  amendment 
in  question,  therefore,  authorizes  the  Board  of 
Estimate  and  Apportionment  to  determine  how 
many  of  these  contracts  in  the  aggregate  may  be 
entered  into  in  any  fiscal  year  and  the  Comptroller's 
certificate  is  then  required  only  in  regard  to  the 
fact  that  each  such  contract  as  presented  to  him 
for  registration  does  not  together  with  the  amount 
of  all  similar  contracts  previously  entered  into 
during  the  current  year  exceed  the  aggregate 
amount  thereof  so  authorized  by  the  Board  of 
Estimate  and  Apportionment. 

It  will  be  seen  therefore  that  Assembly  Bills 
Nos.  741  and  742  while  independent  measures,  each 
desirable  in  regard  to  the  subject  matter  respec- 
tively contained  therein,  sujtplement  each  other, 
and  taken  together  constitute  a  scheme  of  amenda- 
tory legislation  for  the  financial  sj'stem  of  the  city 
which  will  correct  serious  evils,  the  existence  of 
which  has  been  recognized  for  many  years  by 
students  and  critics  of  the  municipal  government 
of  the  city  of  New  York. 

I  have  the  honor  to  be  with  great  respect, 
Your  obedient  servant, 

Bird  S.  Coler, 

Comptroller. 


19 

APPENDIX  NO.  I. 

STATE  OF  NEW  YORK. 

No.    742.  Int.  653. 

In  Assembly, 

February  5,  1900. 

Introduced   by  Mr.   Fallows — read  once  and   re- 
ferred to  the  committee  on  affairs  of  cities. 

AN  ACT 

To  amend  chapter  three  hundred  and  seventy-eight 
of  the  laws  of  eighteen  hundred  and  ninety- 
seven,  entitled  "An  act  to  unite  into  one  munici- 
pality under  the  corporate  name  of  the  city  of 
New  York  the  various  communities  lying  in  and 
about  New  York  harbor,  including  the  city  and 
county  of  New  York,  the  city  of  Brooklyn  and 
the  county  of  Kings,  the  county  of  Richmond, 
and  part  of  the  county  of  Queens,  and  to  provide 
for  the  government  thereof,"  relative  to  the  law 
department. 

The  People  of  the  State  of  New  York^  represented 
in  Senate  and  Assembly,  do  enact  asfoUotos  : 

Section  1.  Section  two  hundred  and  fifty-five  of 
chapter  three  hundred  and  seventy-eight  of  the 
laws  of  eighteen  hundred  and  ninety-seven  is 
hereby  amended  so  as  to  read  as  follows  : 

§  255.  There  shall  be  a  law  dejiartment  of  the 
city  of  New  York,  the  head  wliereof  shall  be  called 
the  corporation  counsel,  who  shall  be  the  attorney 
and  counsel  for  the  city  of  New  York,  the  mayor, 
the  municipal  assembly,  and  each  and  every  officer, 
board  and  department  of  said  city,  except  as  other- 
wise herein  provided.  The  salary  of  the  corpora- 
tion counsel  shall  be  fifteen  thousand  dollars  a 
year.  The  corjjoration  counsel  shall  liave  charge  and- 


20 

rondiict  of  all  the  law  business  of  the  corporation 
and  its  departments  and  boards,  and  of  all  law  busi- 
ness in  which  the  city  of  Xew  York  is  interested, 
except  as  otherwise  herein  ijrovided.  He  shall 
have  charge  and  conduct  of  the  legal  proceedings 
necessary  in  opening,  widening,  altering  and  clos- 
ing streets,  and  in  acquiring  real  estate  or  interests 
therein  for  the  city  by  condemnation  proceedings, 
and  the  preparation  of  all  leases,  deeds,  contracts, 
bonds  and  other  legal  papers  of  the  city  or  of,  or 
connected  with,  any  department,  board  or  officer 
thereof,  and  he  shall  approve  as  to  form  all  such 
contracts,  leases,  deeds,  bonds  and  other  legal 
papers  ;  provided,  hoiceve?;  tliat  he  shall  not  insti- 
tute any  proceedinrj  for  acquiring  title  to  real  es- 
tate by  condemnation  proceedings,  except  for  open- 
ing streets,  unless  the  same  s7iall  have  been  ap- 
proved by  the  concurrent  note  of  all  the  viembers  of 
the  hoard  of  estimate  and  apportionment  upon  a 
statement  to  be  furnished  said  board,  of  the  valua- 
tion of  sncJi  veal  estate  as  assessed  for  purposes  of 
taxation  ;  and  provided,  further,  that  the  board  of 
estimate  and  apportionmei^t,  shallhave  iwxoer  by  a 
majority  vote  to  direct  such  changes  to  be  made  in 
the  forms  of  contracts  and  specifications  as  may 
seem  to  promote  the  interests  of  the  city.  He  shall 
be  the  legal  adviser  of  the  mayor,  the 
municipal  assembly  and  the  various  depart- 
ments, boards  and  officers  except  as  other- 
wise herein  provided,  and  it  shall  be  his  duty  to 
furnish  to  the  mayor,  the  municipal  assembly  and 
to  every  department,  board  and  officer  of  the 
city  all  such  advice  and  legal  assistance  as  counsel 
and  attorney  in  or  out  of  court  as  may  be  required 
by  them,  or  either  of  them,  and  for  that  j)urpose, 
the  corporation  counsel  may  assign  an  assistant  or 
assistants  to  any  department  that  he  shall  deem  to 
need  the  same.  No  officer,  board  or  department 
of  the  city,  unless  it  be  herein  otherwise  specially 
provided,  shall  have  or  employ  any  attorney  or 
counsel.     The  corporation  counsel,  except  as  other- 


21 

wise  herein  provided,  shall  have  the  right  to  in- 
stitute actions  in  law  or  equity,  and  any  proceed- 
ings provided  by  the  code  of  civil  procedure  or  by 
law  in  any  court,  local,  state  or  national,  to  main- 
tain, defend  and  establish  the  rights,  interests, 
revenues,  property,  privileges,  franchises,  or  de- 
mands of  the  city,or  of  any  partor  portion  thereof, 
or  of  the  people  thereof,  or  to  collect  any  money, 
debts,  fines,  or  penalties  or  to  enforce  the  laws  and 
ordinances.  He  shall  be  a  member  of  the  board 
of  estimate  and  apportionment,  and  of  the  board 
of  public  improvements.  He  shall  not  he  em- 
powered to  compromise,  settle  or  arljtisi  any  rights, 
claims,  demands  or  causes  of  action  infatior  of 
or  against  the  city  of  New  York,  or  to  permit, 
offer  or  confess  judgment  against  the  city,  or  to 
accept  any  offer  of  judgment  in  favor  of  the  city 
witlioui  tlte  previous  loritten  approval  of  the  comp- 
troller ;  and  in  case  of  any  claim  for  a  money 
judgment  exci^eding  ten  iliousand  dollars,  or  for 
relief  other  than  in  the  nature  of  a  mo)iey  judg- 
ment, the  previoiis  written  approval  of  the  mayor 
shall  be  also  necessary. 

§  2.  This  act  shall  take  eilect  immediately. 


22 

APPENDIX  NO.  II. 

STATE  OF  NEW  YORK. 

ISIo.  741.  Int.  652. 

In  Assembly, 

February  5,  1900. 


Introduced  by  Mr.  Fallows — read   once  and  re- 
ferred to  the  committee  on  affairs  of  cities. 

AN  ACT 

To  amend  chapter  three  liundred  and  seventy-eight 
of  tlie  hnvs  of  eighteen  hundred  and  idnety-seven, 
entitled  "An  act  to  unite  into  one  municipality 
under  the  corporate  name  of  the  city  of  New 
York  the  various  communities  lying-  in  and  about 
New  York  harbor,  including  the  city  and  county 
of  New  York,  the  city  of  Brooklyn  and  the 
county  of  Kings,  the  county  of  Richmond,  and 
part  of  the  county  of  Queens,  and  to  provide  for 
the  government  thereof,"  in  regard  to  the  de- 
partment of  finance. 

The  people  of  tlie  State  of  New  Yoric,  represented 
in  Senate  and  Assembl?/,  do  enact  asfolloros  : 

Section  1.  Section  one  liundred  and  forty-nine  of 
chapter  three  hundred  and  seventy-eight  of  the 
laws  of  eighteen  hundred  and  ninety-seven,  is 
hereby  amended  so  as  to  read  as  follows : 

§  149.  The  finance  department  shall  have  control 
of  the  fiscal  concerns  of  the  corporation.  All 
accounts  rendered  to  or  kept  in  the  other  depart- 
ments shall  be  subject  to  the  insj^ection  and  re- 
vision of  the  officers  of  this  department.  It  shall 
prescribe  the  forms  of  keeping  and  rendering  all 
city  accoimts,  and  except  as  herein  otherwise  pro- 


23 

vided.  the  manner  in  which  all  salaries  shall  be 
drawn,  and  the  mode  by  which  nil  creditors,  officers 
and  employes  of  the  corporation  shall  be  paid.  All 
payments  by  or  on  behalf  of  the  corporation,  ex- 
cept as  othei-wise  specially  provided,  shall  be  made 
through  the  proper  disbursing  officer  of  the  depart- 
ment of  finance,  on  vouchers  to  be  filed  in  said  de- 
partment, by  means  of  warrants  drawn  on  the 
chamberlain  by  the  comptroller,  and  countersigned 
by  the  mayor.  All  contracts  inriolvivg  an  obliga- 
tion payable  from,  the  city  treasury  for  toorJc  to  be 
done  or  supi^fUes  lo  he  furnished,  not  made  at 
public  letting  in  the  manner  provided  in  section 
four  hundred  and  nineteen  of  this  act,  shall  be 
evidenced  by  orders  or  requisitions  in  writing 
upon  forms  to  be  approved  by  the  comptroller, 
signed  by  the  proper  head  of  the  department, 
board,  officer  or  commission.  Such  orders  shall 
either  state  the  specific  amount  agreed  upon  for 
the  said  work  or  supplies,  or  shall  state  that  pay - 
ment  therefor  shall  be  at  the  current  market  rates, 
but  in  either  event  it  shall  be  lawful  for  and  the 
duty  of  the  department  of  finance  in  auditing  and. 
paying  claims  against  the  city  treasury  arising 
thereunder,  to  deduct  therefrom  any  charge  in  ex- 
cess of  such  current  market  rates  ;  provided  how- 
ever, that  such  action  by  the  department  of  finance 
shall  not  be  conclusice  to  the  extent  of  presenting 
creditors  of  the  city  of  New  York  from  disputing 
the  justice  of  such  determination  by  a  proper 
action  at  law.  No  claim  shall  be  enforceable  at 
law  against  the  city  of  Ne70  York  for  work  done 
or  supplies  furnished,  not  arising  out  of  a  con- 
tract made  at  public  letting,  and  excepting  pur- 
chases for  contingencies  of  less  than  ten  dollars 
unless  the  same  sJiall  have  been  duly  ordered  by 
the  proper  head  of  department,  board,  officer  or 
commission  in  the  manner  herein,  promded,  and  a 
reference  to  this  section,  shallhe  printed  on  all  such 
requisitions  or  orders.  The  comptroller  may  re- 
quire any  person  presenting  for  settlement  an  ac- 


24 

count  or  claim  for  any  cause  whatever,  against  the 
corporation,  to  be  sworn  before  him  touching  such 
account  or  claim,  and  when  so  sworn,  to  answer 
orally  as  to  any  facts  relative  to  the  justness  of 
such  account  or  claim.  Willful  false  swearing  be- 
fore him  is  perjury,  and  punishable  as  such.  He 
sliall  settle  and  adjust  all  claims  in  favor  of  or 
against  the  corporation,  and  all  accounts  in  which 
the  corporation  is  concerned  as  debtor  or  creditor  * 
but  in  adjusting  and  settling  such  claims,  he  shall, 
as  far  as  practicable,  be  governed  by  the  rules  of 
law  and  principles  of  equity  which  prevail  in 
courts  of  justice.  The  power  hereby  given  to  settle 
and  adjust  such  claims  shall  not  be  construed  to 
give  such  settlement  and  adjustment  the  binding 
effect  of  a  judgment  or  decree,  nor  to  authorize  the 
comptroller  to  dispute  the  amount  of  any  salary 
established  by  or  under  the  authority  of  any  officer 
of  department  authorized  to  establish  the  same, 
nor  to  question  the  due  performance  of  his  duties 
by  such  officer,  except  when  necessary  to  prevent 
fraud.  Claims  settled  and  adjusted,  by  the  comp- 
troller under  the  author  it)/  of  this  section,  shall,  if 
no  appropriation  in  the  hud  get  he  ijroperly  appli- 
cahle  thereto,  be  paid  from  the  proceeds  of  revenue 
bonds  issued  as  pronided.  by  section  one  hund,red. 
and  eighty-eight  of  this  act ;  provided,  hoicever, 
that  where  such,  claim  shall  amount  to  ten  thous- 
and,  dollars  or  more  the  approval  in  writing  of 
the  mayor  shall  be  obtained,  before  payment  thereof 
sliall  be  made.  The  comptroller  shall  not  reduce  the 
rate  of  interest  upon  any  taxes  or  assessments  below 
the  amount  fixed  by  law.  No  contract  hereafter 
made,  the  expense  or  the  execution  of  which  is  not 
by  law  or  ordinance,  in  whole  or  in  part,  to  be  paid 
by  assessments  upon  the  property  benefited,  shall 
be  binding  or  of  any  force,  unless  the  comptroller 
shall  endorse  thereon  his  certificate  tliat  there  re- 
mains unexpended  and  unapplied,  as  herein  pro- 
vided, a  balance  of  the  appropriation  or  fund  ap- 
plicable thereto,  sufficient  to  pay  the  estimated  ex- 


25 

pense  of  executing  such  contracts  as  certified  by 
the  officer  making  the  .same.  Bnt  tliis  provision 
shall  not  apply  to  work  done,  or  supplies  furnished, 
not  involving  the  expenditui'e  of  more  than  one 
thousand  dollars,  unless  the  same  is  required  by 
law  to  be  done  by  contract  at  public  letting.  It 
shall  be  the  duty  of  the  comptroller  to  make  such 
endorsement  upon  every  such  contract  so  presented 
to  him,  if  there  remains  unapplied  and  unexpended 
such  amount  so  specified  by  the  officer  making  the 
contract,  and  to  thereafter  hold  and  retain  such  sum 
to  pay  the  expense  incurred  until  the  said  contract 
shall  be  duly  performed.  And  such  endorsement 
shall  be  sufficient  evidence  of  such  appropriation 
or  fund  in  any  action.  In  the  case  of  conlracts 
payable  in  whole  or  in  part  from  assessments  upon 
the  property  henefited,  the  aggregate  amount  there- 
of to  be  entered  into  by  tJie  city  of  Neio  York  in 
any  one  calend.ar  year,  shall  not  exceed  the  amount 
thereof  which  shall  be  authorized,  by  the  board  of 
estimate  and  apportionment  for  such  year  by  reso- 
lution adopted  by  the  concurrent  vote  of  all  the 
members  thereof ;  and  no  such  contract  shall  be 
Innding  or  of  any  force,  unless  the  comptroller 
shall  indorse  thereon  his  certificate,  that  the 
amount  thereof  together  loith  the  amount  of  all 
similar  contracts  previously  entered  into  duriitg 
the  current  year  does  not  exceed  the  aggregate 
amount  thereof  so  authorized  by  the  board,  of  esti- 
mate and,  apportionment.  The  comptroller  shall 
furnish  to  each  head  of  department,  weekly,  a 
statement  of  the  unexpended  balances  of  the  ap- 
propriation of  his  department.  Wages  and  sala- 
ries, except  as  otherwise  provided  in  this  act,  may 
be  paid  upon  payrolls,  upon  which  each  person 
named  thereon  shall  separately  receipt  for  the 
amount  paid  to  such  person,  and  in  every  case  of 
payment  upon  a  payroll,  the  warrant  for  the  ag- 
gregate amount  of  wages  and  salaries  included 
therein  may  be  made  payable  to  the  superintend- 
ent, foreman  or  other  officer  designated  for  the 


26 

purpose.  The  comptroller  shall  enter  into,  npon 
behalf  of  the  city  of  New  York,  any  lease  autho- 
rized by  the  commissioners  of  the  sinking  fund  of 
property  leased  to  the  city.  The  assent  of  the 
comptroller  shall  be  necessary  to  all  agreements 
hereafter  entered  into  by  any  city  officer,  hoards 
comviission  or  department  for  the  acquisition  by 
purchase  of  any  real  estate  or  easement  therein, 
when  such  an  agreement  involves  an  obligation  to 
pay  or  an  expenditure  of  any  money  on  behalf  of 
the  city,  and  in  any  proceedings  that  may  hereafter 
be  had  to  acquire  real  estate  or  hereditaments  for 
or  on  behalf  of  the  corporation  of  the  city  of  New 
York,  before  an  award  shall  be  confirmed,  impos- 
ing an  obligation  upon  the  city  to  pay  any  moneys, 
the  comptroller  shall  have  thirty  days'  notice  in 
writing,  stating  before  whom  and  at  what  time 
such  proceeding  will  take  place.  The  comptroller 
of  the  city  of  New  York  shall  be  elected  and  shall 
hold  office  as  provided  in  this  act  and  he  shall  re- 
ceive an  annual  salary  of  ten  thousand  dollars. 

§  2.  This  act  shall  take  effect  immediately. 


27 

APPENDIX   NO.  III. 

CITY  OF  NEW  YORK, 
finance  department, 
comptrollek's  office. 

March  14th,  1898. 

Hon.  John  Whalen, 

Corporation  Counsel. 
Sir-: 

I  have  received  your  coninuinication  of  the 
8th  inst.  transmitting,  with  your  approval,  a 
transcript  of  Judgment  in  the  case  of  Edward  R. 
Schafer,  as  administrator,  against  The  Mayor,  etc., 
in  wliich  you  state  that  this  suit  was  compromised 
by  your  offer  of  judgment  in  pursuance  of  a  settle- 
ment of  the  claim  which  you  effected  witli  tlie  at- 
torneys. Of  this  settlement  the  Comptroller  had 
no  notice. 

I  desire  to  submit  for  your  careful  considera- 
tion, certain  questions  in  regard  to  the  settlement 
of  claims  against  the  City  which  have  been  put  in 
litigation. 

Both  under  section  123  of  the  Consolidation  Act 
and  under  section  149  of  the  Charter,  the  Comp- 
troller is  the  officer  charged  with  the  duty  of  set- 
tling and  adjusting  "all  claims  in  favor  of  or 
against  the  corporation."  I  am  aware  of  the  fact 
that  it  has  always  been  asserted  by  the  Law  De- 
partment that  this  grant  of  power  was  not  ex- 
clusive to  the  extent  of  barring  the  Corporation 
Counsel  from  settling  claims  against  the  City  with- 
out the  ai:)proval  of  the  Comptroller  where  an  action 
has  once  been  begun. 

In  this  contention  the  Finance  Department  has 
never  acquiesced,  and  tlie  subject  has  been  the 
cause  of  lengthy  and  exhaustive  correspondence, 
which  is  to  be  found  on  the  files  of  our  respective 
departments. 


Fortunately  for  the  City,  this  disagreement  be- 
tween the  two  departments  has  never,  to  my  knowl- 
edge, reached  the  practical  stage  of  submission  to 
the  Courts  ;  for  wliile  each  Corporation  Counsel 
has  always  maintained  his  right  in  law  to  settle  all 
claims  in  litigation  without  concurrence  by  the 
Comptroller,  such  settlements  have  for  many  years, 
bj^  amicable  agreement,  been  sulnnitted  to  the 
head  of  the  Finance  Department  for  his  considera- 
tion. On  the  other  hand  no  Comptroller,  has.  as  I 
am  informed,  stood  on  his  undoubted  right  to  ef- 
fect settlements  of  claims  against  the  City,  without 
the  co-operation  of  the  Corporation  Counsel,  but 
such  settlements  liave  been  uniformly  submitted 
to  the  judgment  of  the  head  of  the  Law  Depart- 
ment. "Whatever  exceptions  there  may  liaA'e  been 
in  the  last  twenty  years  to  this  rule,  they  will  be 
found  to  be  so  few  or  unimportant  as  onlj' to  em- 
phasize the  good  faith  with  which  this  agreement 
has  been  maintained. 

This  friendly  co-operation  of  the  two  depart- 
ments has  been  of  great  advantage  to  the  City.  It 
need  be  taken  as  reflecting  in  not  the  slightest  de- 
gree on  the  good  faith  of  any  of  your  predecessors 
or  their  assistants  to  state  that  the  records  of 
this  department  show  a  large  number  of  instances 
where  settlements  submitted  by  the  Law  Depart- 
ment have  been  finallj^  compromised  at  amounts 
considerably  smaller  after  action  thereon  by  the 
Comptroller.  I  have  no  doubt  also  that  the  con- 
verse has  been  true  in  the  case  of  settlements  ini- 
tiated by  the  Comptroller.  Whatever  the  actual 
amount  of  saving  to  the  City  has  been  as  the  result 
of  this  practice,  I  feel  that  it  scarcely  needs  an  ar- 
gument to  demonstrate  the  desirability  of  main- 
taining such  a  check  ;  since  the  unlimited  power  of 
compromise  granted  by  both  the  Consolidation  Act 
and  the  Charter  is  too  vast  to  be  properly  exer- 
cised by  the  fallible  judgment  of  any  one  j)ublic 
servant. 

From  another  point  of  view,  also,  it  seems  to  me 


29 

that    the    co-operation  of    our    two    departments 
shoiikl  be  maintained  in  the  future  as  in  tlie  i^ast. 

I  liave  the  utmost  confidence  in  tlie  judgment 
and  discretion  of  the  present  head  of  the  Law  De- 
jiartment,  and  it  is  by  no  means  because  I  have 
any  overweening  regard  for  my  own  judgment  that 
I  am  addressing  this  communication  to  you.  The 
liistory  of  municipal  government,  unfortunately 
shows,  however,  that  at  some  time  in  the  future  it 
may  transpire  that  the  conduct  of  the  Law  Depart- 
ment will  pass  under  the  control  of  some  one  less 
able  or  less  zealous  in  the  public  service  than  your- 
self. Should  this  hajipen  the  City  would  certainly 
have  cause  to  regret  a  departure  from  tliat  salutary 
check  in  the  settlement  of  claims  against  the  City, 
which  has  heretofore  prevailed.  It  is,  therefore, 
largely  on  account  of  the  importance  of  the  prece- 
dent which  you  would  be  setting  if  you  should 
establish  the  position  that  the  Comptroller  and  the 
Corporation  Counsel  should  not  consult  each  other 
in  the  settlement  of  claims  against  the  City  that  I 
respectfully  urge  upon  your  attention  the  desir- 
ability of  continuing  the  i-elation  of  our  two  re- 
spective departments  on  the  same  basis  as  has 
heretofore  existed. 

It  will  be  quite  sufficient,  if,  as  heretofore,  in 
cases  which  you  propose  to  settle,  you  notify  the 
Comptroller  of  the  terms  of  the  proposed  settle- 
ment, with  the  statement  that  if  no  objections  are 
submitted  within  a  certain  number  of  days,  an 
offer  of  judgment  will  be  made. 

In  view  of  the  importance  of  this  matter,  I  would 
be  gratified  at  receiving  an  early  reply. 
Very  truly  yours. 

Bird  S.  Coler, 

Comptroller. 


80 

APPENDIX  NO.  IV. 

LAW  DEPARTMENT 

OFFICE  OF  THE  CORPORATION  COUNSEL. 

New  York,  May  16th,  1898. 

Hon.  Bird  S.  Coler, 

Comptroller. 

Sir. — I  am  in  receipt  of  your  communication, 
bearing  date  14  March,  subaiitting  to  me  certain 
questions  in  regard  to  the  settlement  ot  claims 
against  the  city,  which  have  been  put  in  litigation. 

Tlie  matter  whicli  gave  rise  to  your  communica- 
tion, was  the  transmission  to  you  by  me,  with  my 
approval,  of  a  transcript  of  judgment  in  the  case 
of  Edward  R.  Schafer,  as  Administrator,  against 
The  Mayor,  etc.,  in  which  I  stated  that  this  suit 
was  compromised  by  my  offer  of  judgment,  in 
pursuance  of  a  settlement  of  the  claim,  and  you 
correctly  state  that  of  this  settlement  the  Comp- 
troller had  no  notice. 

Your  letter  is  quite  lengthy,  but  I  take  from  it 
the  following  passages,  which  state,  in  substance 
your  suggestion  and  contention  : 

"  Both  under  Section  123  of  the  Consolida- 
"  tion  Act  and  under  Section  149  of  the  Char- 
"  ter,  the  Comptroller  is  the  officer  charged 
"  with  the  duty  of  settling  and  adjusting  'all 
"  claims  in  favor  of  or  against  tlie  coi'poration.' 
"1  ain  aware  of  the  fact  that  it  has  always 
"  been  asserted  by  the  Law  Department  that 
"  this  grant  of  power  was  not  exclusive  to  the 
"  extent  of  liarring  the  Corporation  Counsel 
"  from  settling  claims  against  the  city  with- 
"  out  the  approval  of  the  Comptroller  where 
"  an  action  has  once  been  commenced. 

•'  Li  tliis  contention  the  Finance  Depart- 
"  ment  has  never  acquiesced,  and  the  subject 
"  has  been  the  cause  of  lengthy  and  exhaustive 
"  correspondence,  which  is  to  be  found  on  the 
"  files  of  our  respective  dejiartments. 


31 

"  Fortunately  for  the  city,  this  disagree- 
"  ment  between  the  two  departments  has 
"  never,  to  my  knowledge,  reached  the  prac- 
"  tical  stage  of  submission  to  tlie  Courts  ;  for, 
'•  while  each  Corporation  Counsel  has  always 
"  maintained  his  right  in  law  to  settle  all 
"  claims  in  litigation  without  concurrence  by 
"  the  Comptroller,  such  settlements  have  for 
"  many  years,  by  amicable  agreement,  been 
"  submitted  to  the  head  of  the  Finance  De- 
"  partment  for  his  consideration.  On  the 
"other  hand,  no  Comptroller  lias,  as  I  am  in- 
"  formed,  stood  on  his  undoubted  right  to 
"  effect  settlements  of  claims  against  the  city, 
"  without  the  co-operation  of  the  Corporation 
"Counsel,  but  such  settlements  have  been 
"  uniformly  sulimitted  to  the  judgment  of  the 
"  head  of  the  Law  Department.  ^Vhatever 
"  exceptions  there  may  have  been  in  the  last 
"  twenty  years  to  this  rule,  they  will  be  found 
"to  be  so  few  or  unimportant  as  only  to 
"  emphasize  the  good  faith  with  which  this 
"  agreement  has  been  maintained. 

"  This  friendly  co-operation  of  the  two  de- 
"  partments  has  been  of  great  advantage  to 
"the  City.  It  need  betaken  as  reflecting  in 
"  not  the  slightest  degree  on  the  good  faith  of 
"  any  of  your  predecessors  or  their  assistants 
"  to  state  that  the  records  of  this  department 
"  show  a  large  numlier  of  instances  where  set- 
"  tlements  sulunitted  by  the  Law  Department 
"  have  been  finally  compromised  at  amounts 
"  considerably  smaller,  after  action  thereon  by 
"  the  Comptroller.  I  have  no  doubt  also,  that 
"  the  converse  has  been  true  in  the  case  of 
"  settlements  initiated  by  the  Comptroller. 
"  Whatever  the  actual  amount  of  saving  to 
"  the  city  has  been  as  the  result  of  this  prac- 
"  tice,  I  feel  that  it  scarcely  needs  an  argu- 
"  ment  to  demonstrate  the  desirability  of 
"  maintaining  such  a  check  ;  since  the  uulim- 
"  ited  power  of  conii^romise  granted  by  both 
"  the  Consolidation  Act  and  the  Charter  is  too 
"  vast  to  be  properly  exercised  by  the  fallible 
"  judgment  of  any  one  public  servant." 

If  I  were   to   take   the   literal   wording  of  your 
commiinication,     there    would    be    no    particular 


32 

reason  for  answerina;  it  at  any  great  length,  because 
there  has  been  no  change  from  the  commencement 
of  my  administration  to  tlie  present  time,  from  the 
policy  pursued  by  this  office  towards  the  Finance 
Department. 

But,  in  spite  of  its  courteous  Avording,  your 
communication  is  not  only  a  suggestion  for  har- 
mony and  co-operation  between  the  two  depart- 
ments, a  suggestion  which  in  every  respect  coin- 
cides with  my  views  and  wishes,  and  I  may  add, 
with  my  conduct  of  the  Law  Department,  there  is 
iinderlying  your  suggestion  an  expression  of  the 
theory  so  often,  so  unifoi  ndy,  and  I  may  add,  so 
unsuccessfully  maintained  by  your  predecessors, 
that  the  Finance  Department  has  the  right  of  su- 
pervision over  the  Law  Department  of  the  city  in 
regard  to  the  settlement  by  the  latter  department 
of  claims  in  litigation.  ,, 

This  claim  on  the  part  of  the  Finance  Depart- 
ment has  been  made  with  unfailing  regularity  by 
each  succeeding  Comptroller,  almost  from  the 
origin  of  the  two  departments.  And  the  Law  De- 
partment has  always  successfully  resisted  it,  as  an 
assumption  of  authority  which  would  simply  add 
this  department  to  the  five  bureaus  in  the  Finance 
Department. 

The  position  of  the  Law  Department  has  always 
been  very  simple  and  perfectly  consistent.  It  is, 
that  the  Corporation  Counsel  is  in  no  sense  the  at- 
torney of  the  Comptroller,  but  is  the  law  officer  of 
the  public  corporation. 

The  only  right  which  the  other  departments 
have,  as  regards  the  Law  Department,  is  to  call 
U])on  it  for  legal  advice  and  assistance . 

Up  to  the  time  of  the  bringing  of  an  action,  this 
department  has  nothing  to  do  with  a  claim,  except 
to  examine  it  when  you  so  request,  and  has  not  the 
slightest  control  over  your  action,  nor,  indeed,  any 
desire  to  exercise  such  control,  leaving  to  your  de- 
partment, its  full,  legal  right  of  settlement. 


33 

But,  from  the  moment'  that  the  summons  has 
been  served,  and  the  action  commenced,  the  situa- 
tion is  entirely  changed.  Your  dejjartment  then 
loses  all  jurisdiction  over  the  settlement  of  the 
claim  which  has  taken  the  form  of  litigation. 

Within  the  legal  bounds  of  his  authority,  as  law 
officer  of  the  city,  the  Corporation  Counsel  has  the 
right  and  diity  to  settle  such  a  claim,  if,  in  his 
opinion,  after  an  examination  of  the  law  applic- 
able to  the  case,  such  a  settlement  is  advisable,  and 
as  to  that  settlement  you  have  neither  power,  duty 
nor  discretion  or  responsibility. 

The  difference  between  the  powers  of  the  two 
departments  is  tlierefore  sharply  defined,  and  the 
cooperation  and  harmony  which  your  letter  sug- 
gests, can  only  be  carried  out  by  an  adherence  of 
each  of  them  to  its  own  special  jurisdiction. 

Upon  this  question,  some  coirespoudence  was  had 
in  former  years  between  the  Finance  and  Law  De- 
jiartments,  ujion  the  question  of  their  rights  and 
duties  of  law,  and  in  the  course  of  the  controversy 
which  had  then  arisen  between  them,  there  were 
procured  by  the  then  Corporation  Counsel,  Hon. 
William  H.  Whitney,  two  letters,  one  from  the 
Hon.  William  M.  Evarts  and  the  other  from  the 
Hon.  George  Ticknor  Curtis. 

Of  the  correspondence,  including  the  letters  of 
Mr.  Evarts  and  Mr.  Curtis,  I  herewith  enclose  you 
a  copy,  and  request  you  to  peruse  the  same. 

I  may  add  that  I  shall  in  the  future,  act  in 
every  case  which  is  in  litigation,  in  the  manner 
which,  in  my  judgment  and  belief,  and  within  the 
limits  of  my  powers,  shall  be  most  advantageous 
to  the  interests  of  the  city. 

And  if  those  interests,  in  my  opinion,  require  a 
compromise,  a  compromise  will  be  made  by  me. 

All  of  the  foregoing  communication  has  been  writ- 
ten in  answer  to  tliat  portion  of  your  letter  which 
treats  the  question  as  one  of  power,  but  there  is 
another  side  to  it,  however,  which  you  also  touch 
upon,  and  which  has  two  different  aspects. 


34 

The  first  of  these  is  the  question  of  the  advan- 
tage to  the  city  of  the  conference  or  consultation 
between  the  two  departments,  prior  to  the  settle- 
ment of  claims. 

The  other  aspect  of  the  question  is  shown  in  that 
part  of  your  letter,  wherein  you  seek  to  point  out 
to  me  that  whatever  may  be  the  honesty  or  ability 
of  the  present  administration  of  this  ofiice,  yet,  in 
the  future,  the  office  may  be  controlled  by  some 
one  who  may  be  wanting  in  either  or  both,  and 
therefore,  that  the  precedent  should  not  be  estab- 
lished of  acting  without  the  advice  of  the  Finance 
Department. 

As  to  the  question  of  advisability.  I  have  always 
been  ready  to  consult  your  Department  in  regard 
to  pending  matters,  whenever  I  thought  I  could 
obtain  from  you  any  information  which  would 
assist  me  in  the  conduct  of  the  affairs  of  my  de- 
partment, and  I  shall  always,  in  every  case  in  this 
office,  wherein  1  have  any  reason  to  suppose  that 
you  are  in  possession  of  any  information  or  knowl- 
edge which  I  should  obtain  before  settling  a  case, 
communicate  with  you  in  regard  to  the  matter. 

As  you  must  know,  the  actual  settlements  made 
by  this  office  without  any  communication  with 
your  department  are  very  rare,  and  they  have 
always  been  made  entirely  for  legal  reasons,  which 
no  information  from  your  department  could  in  anj' 
way  alter. 

The  case  of  Shafer  against  The  ^Mayor,  referred 
to  in  your  letter,  is  an  illustration  of  what  I  mean. 

This  was  a  very  close  case,  but,  when  the  Court 
of  Appeals  had  decided  all  the  questions  of  law 
which  were  in  the  case,  it  became  very  evident  that, 
on  a  new  trial,  before  a  jury,  the  City  would  an 
mulcted  very  heavily. 

Therefore,  the  settlement  to  which  you  refer,  be, 
which  might  on  its  face  seem  somewhat  large, 
was  made,  and  I  have  no  doubt  saved  the  City 
several  thousands  of  dollars. 


35 

As  the  settlement  in  this  case  was  based  entirely 
upon  a  question  of  law,  this  was  a  matter  in  which 
your  assistance  would  have  been  entirely  unavail- 
ing, and  I  had  excellent  reason  to  believe,  that  as 
to  the  amount,  a  settlement  could  not  be  procured 
upon  lower  terms  tlian  those  agreed  upon. 

As  to  the  last  suggestion  in  your  communication, 
that  some  future  Corporation  Counsel,  unchecked 
by  your  department,  may  take  some  action  to  the 
city's  injury,  I  can  only  say  that  I  hope  for  better 
things. 

The  head  of  any  department  can,  by  his  negli- 
gence, or  i^ositive  wrongdoing,  do  the  City  very 
great  damage,  but  the  fact  that  some  future  official 
will  misuse  his  power  furnishes  no  reason  for  the 
present  head  of  a  dei^artment  for  refusing  to  fid- 
hll  the  duties  imposed  upon  him  by  law. 

Tlie  Finance  Department  is  a  most  imjtortant 
one,  but  it  has  no  right  to  review  the  discretion 
which  the  law  has  given  to  other  departments. 
(People  ex  rel.  Andrews  v.  Fitch,  9  App.  Div., 
439). 

I  will  say  in  terminating,  what  I  have  already  per- 
haps made  clear,  that  while  T  do  most  emphatically 
deny  that  the  Finance  Department  has  any  power 
in  relation  to  the  settlement  of  cases  which  are  in 
actual  litigation,  and  while  I  shall  not  fail  to  ex- 
ercise the  powers  and  f  nihil  the  duties  cast  upon 
me  by  law,  I  shall  always  seek  to  obtain  from  the 
Finance  Department  such  evidence  or  other  infor- 
mation as  may  seem  to  me  needful  for  any  guid- 
ance in  my  action  upon  matters  of  law. 
Yours, 
(Signed)  John  Wiialen, 

Corporation  Counsel. 

One  enclosure. 


86 

APPENDIX  No,  V. 

SUPREME  COUKT. 


Ill  re  O'Bkiex 

AGAINST 

The  Mayor. 


McLAt'GiiLix,    ,/.    (dissenting) — 1    cannot  agree 
with  the  othei-  members  of  the  Court  to  affirm  this 
order.     The  Corporation  Counsel,  in  my  opinion, 
had  no  authority  to  make  the  offer  upon  which  the 
judgments  were  entered,  and.  tlierefore,  his  act  is 
not  binding  on  the  City.     All  the  power  which  the 
City  has  is  specifically  expressed  in  or  necessarily 
implied   from   the   Charter :  and  the   Corporation 
Counsel,  the  legal  adviser  of  the  City,  has  no  power 
other  than  that  derived  from  the  City  through  the 
Charter,  and  every  act  assumed  to  be  done  by  him 
in  excess  of  that   power   is   void.     The  charter  in 
effect  at  the  time  the  offer  was  made   (Consolida- 
tion Act,  Laws  of  1882.  chap.  410)  did  not  confer 
upon  the  Corporation  Counsel,  either  directly  or 
impliedly,  the  power  to  do  what  he  did,  and  his 
act  is  not  sustained  by  any  precedent  that  I  have 
been  able  to  discover.     An  attorney  acting  for  an 
individual  cannot,  in   the   absence   of   express  au- 
thority, make  a  compromise  for  his  client,  or  con- 
clude him  in  relation    to    the    subject-matter  of 
an    action    (Barrett   vs.   Third    Avenue    Railroad 
Co.,   45  N.  Y.,    635)  ;  he    cannot  satisfy  a  judg- 
ment without  payment  in  full,  and   if  he  does  the 
satisfaction  will   be   set  aside  (Beers  vs.  Hendrick- 
son,  45  N.  Y.,  665);   he  cannot  release  his  clients 
rights  or  subject  him  to  a  new  obligation  (Lewis  vs. 
Daane,  141  X.  Y.,  314).     The  Corporation  Cou.nsel 
has  no  larger  powers,  as  such,  to  bind   the  City 
than  those  connected  with  the  ordinary  relations  of 


37 

attorney  and  client.  This  is  precisely  what  was 
held  in  The  People  and  Taylor  vs.  Mayor  (11  Abb. 
Pr.,  66).  There  judgment  was  rendered  against  the 
City  of  New  York,  and  the  Corporation  Counsel, 
doing  what  he  believed  to  be  for  the  best  interest 
of  the  City,  stipulated  not  to  axipeal.  Subsequently 
a  motion  was  made  to  set  aside  the  stipulation,  and 
the  Court  held  that  it  would  not  inquire  into  the 
merits  of  the  action  by  considering  whether  the 
opening  of  the  judgment  would  result  in  gain  or 
loss  to  the  City  ;  that  the  Corporation  Counsel  had 
no  power  to  make  the  stipulation,  and,  therefore, 
the  City  had  a  legal  right  to  have  it  vacated.  In 
the  course  of  the  opinion,  delivered  by  Mr.  Justice 
iNGRAHAjr,  he  said  :  "  It  would  be  almost  imjiossi- 
ble  to  form  a  correct  idea  of  the  consequences  if  it 
were  ever  established  tliat  any  head  of  a  dejiai't- 
ment  had  the  power,  without  the  authority  of  the 
Common  Council,  to  dispose  of  City  rights  and 
property,  either  directly  or  indirectly  ;  and  if  tlie 
head  of  the  Law  Department  can,  at  his  pleasure, 
make  the  corporation  a  party  to  suits,  and  when  a 
large  recovery  is  had  against  the  city  can  stipulate 
that  the  city  shall  not  have  any  means  of  review  or 
redress,  he  would  possess  an  absolute  (control  over 
the  city  property  far  beyond  that  possessed  even 
by  the  Common  Council.  It  appears  tome  that  lie 
possesses  no  such  power,  and  the  stipulations  were 
unauthorized  and  cannot  be  sustained." 

Here  the  Corporation  Counsel  had  no  power  to 
make  the  offers,  and  the  city  has  the  legal 
right  to  have  the  judgments  vacated,  and 
it  is  no  concern  of  the  Court  whether  it 
is  for  the  best  interest  of  the  city  or  not.  The  Court 
discharges  its  duty  by  determining  the  question 
according  to  the  legal  rights  of  the  parties.  The 
power  to  settle  and  compromise  these  actions,  if 
the  power  existed  jit  all  (which  it  is  not  necessary 
now  to  determine),  after  the  claims  had  been  pre- 
sented to  and  rejected  by  the  Comptro'der  (McGin- 
niss  vs.   Mayor,  26   Hun,  142),  was  lodged  in  the 


38 

Common  Council.  The  actions  are  all  based  upon 
contracts,  and  before  they  were  commeticed  the 
claims  forming  the  basis  of  each  were  presented  to 
and  rejected  by  the  Comptroller,  and  after  such  re- 
jection, in  the  absence  of  some  act  of  the  Common 
Council,  no  other  body  or  officer  could  obligate  the 
city  to  pay  the  same  or  any  part  thereof.  Section 
74  of  the  Consolidation  Act  supports  this  view. 
That  section,  among  other  things,  provides  that 
"no  additional  allowance  beyond  the  legal  claim 
which  shall  exist  under  any  contract  with  the  cor- 
poration, or  with  any  department  or  officer  thereof, 
or  for  any  services  on  its  account  or  in  its  employ- 
ment, shall  ever  be  passed  by  the  common  council 
except  by  the  unanimous  vote  thereof  ;  and  in  all 
cases  the  provisions  of  any  such  contract  shall  de- 
termine the  amount  of  any  claim  thereiTnder,  or  in 
connection  therewith,  against  the  said  corporation, 
or  the  value  of  any  such  services." 

But  it  is  said — or  such  inference  may  fairly  be 
drawn  from  the  prevailing  opinion — that  the  Cor- 
jioration  Counsel  had  power  to  do  what  he  did,  be- 
cause his  act  was  approved  by  the  Mayor,  the  spe- 
cial counsel  and  the  Aqueduct  Commissioners,  and 
that  the  Comptroller,  If  he  did  not  consent,  at  least 
did  not  object.  There  is  no  doubt  but  that 
the  officers  connected  with  the  City  Government 
referred  to,  with  the  exception  of  the  Comptroller 
deemed  it  wise,  and  for  the  best  interests  of  the 
city,  that  the  settlement  should  be  made,  and 
that  they  approved  of  the  Corporation  Coun- 
sel's act  in  making  it.  But  I  am  unable  to  see 
that  this  has  any  eiTect  upon  the  question  of  au- 
thority. The  Corporation  Counsel  either  had  the 
power  to  make  tiie  offer  or  else  he  did  not.  if  he 
did  not  have  the  power  under  the  charter,  then  I 
do  not  see  how  it  can  be  held  that  the  jiower  could 
be  conferred  upon  him  by  special  counsel  retained 
solely  to  defend  the  acti(ms,  or  by  the  Aqtieduct 
Commissioners,  whose  powers  were  specified  and  so 
limited  by  the  act  creating  them  that  thev  could 


39 

not  obligate  the  city  to  pay  any  sum  wliatever  for 
work  done  or  materials  fnrnislied  in  the  construc- 
tion of  the  aqueduct  not  specified  in  the  contracts 
which  they  were  authorized  to  make  ;  or  by  the 
Mayor,  because  he,  an  ex  officio  member  of  the 
Aqueduct  Commission,  happened  to  be  j^resent  at 
the  meeting  when  the  resolution  authorizing  the 
settlement  to  be  made  was  passed.  The  Comptrol- 
ler did  not  consent  to  the  settlement,  and  it  was 
not  necessary  for  him  to  object  to  it  in  order  to 
prevent  the  city  being  bound  by  it. 

The  Corporation  Coiinsel,  as  we  have  seen,  had  no 
authority  under  the  charter  to  authorize  the  Judg- 
ments to  be  entered,  and  something  morn  than  the 
facts  which  appear  in  the  record  must  be  shown 
before  he  could  obligate  the  city  to  pay  $700,000. 
The  settlement  may  have  been  a  wise  one,  but  that 
has  nothing  to  do  with  tlie  question  of  whether  or 
not  he  had  the  power  to  make  it.  The  fact  re- 
mains that  the  act  of  the  Corporation  Counsel  was 
unauthorized,  and  the  city  having  attacked  it,  as  it 
had  a  legal  right  to  do,  the  judgments  should  be 
vacated. 

I  am  also  of  the  opinion  that  the  judgments 
should  be  vacated  for  want  of  consideration.  The 
city  is  not  an  eleemosynary  corporation.  It  must 
be  just,  but  it  cannot  be  generous.  It  must  pay  its 
obligations,  but  it  cannot  give  its  property  away. 

The  claims  involved  in  these  actions,  in  the  con- 
dition in  which  they  were  when  the  judgments 
were  entered,  could  not  be  legally  enforced  against 
the  City.  This  has  been  decided  by  the  Court  of 
Appeals  in  O'Brien  rs.  Mayor  (139  N.  Y..  343).  A 
comparison  of  the  complaint  in  the  O'Brien  action 
with  the  complaints  in  these  will  show  that  a  recov- 
ery was  sought  in  all  the  actions  upon  substantially 
the  same  grounds,  and  that  a  determination  of  one 
necessarily  determined  the  rights  of  the  parties  in 
the  others,  and  it  was  so  considered  by  the  Cor- 
poration Counsel,  by  the  special  counsel  and  by  the 
plaintiffs    themselves.       These    actions    and    the 


40 

O'Brien  action  were  all  broiio-ht  in  1891.  The 
O'Brien  action  was  tried  in  June  or  July  of  that 
year,  and  from  that  time  until  after  the  determina- 
tion of  the  Court  of  Appeals  nothing  further  was 
done  in  any  of  these  actions.  After  the  Court  of 
Appeals  had  decided  the  O'Brien  action  in  favor  of 
the  City,  then  the  plaintiffs  in  these  sought  to  se- 
cure some  relief  from  the  Legislature,  and,  failing 
in  that,  applied  in  one  of  the  actions  to  the  Court 
for  leave  to  amend  the  complaint  so  that  the  certifi- 
cate of  the  engineer  might  be  attacketl  as  fraudu- 
lent. The  Court,  however,  refused  to  allow  the 
amendment  and  the  plaintiffs  a]>pealed,  and  there- 
after the  moving  papers  show  that  it  was  practically 
conceded  by  all  the  parties  that  a  recovery  could 
not  be  had  unless  relief  in  some  form  could  be  ob- 
tained from  the  Legislature  or  the  order  refusing 
the  amendment  could  be  reversed. 

The  only  consideration,  therefore,  for  the  judg- 
ment, was  prospective  or  threatened  legislation, 
once  applied  for  and  refused,  or  judicial  action, 
once  applied  for  and  denied.  That  this  was  the 
consideration  clearly  appears  from  the  corresj^ond- 
ence  between  the  Corporation  Counsel  and  the 
special  counsel  and  the  Aqueduct  Commissioners. 

In  the  letter  of  the  Corporation  Counsel  to  the 
special  counsel,  under  date  of  November  '25,  1896, 
he  said:  "The  decision  already  rendered  in 
the  one  case  which  has  been  tried  doubtless  affords 
ample  protection  to  the  City  so  far  as  litigation  is 
concerned,  but  offers  no  assurance  against  legisla- 
tive attacks.  Last  year,  as  you  are  aware,  a  bill 
was  introduced  in  the  Legislature  looking  to  the 
appointment  of  a  commission  to  make  awards  upon 
these  claims,  and  I  am  informed  upon  autliority 
which  appears  to  me  worth}'  of  credence  that  a  simi- 
lar attempt  will  be  made  during  the  forthcoming 
session.  I  am  very  apprehensive  that  either  this 
year  or  some  other  year  such  a  measure  will  be 
passed,  and  I  feel  that  if  it  should  our  chance  of 
comj)lete  success  before  a  commission  would,  for 


41 

many  and  obvious  reasons,  be  very  remote  *  *  *. 
As  you  are  aware,  I  have  always  maintained  the 
position,  as  well  since  I  have  been  Counsel  to  the 
Corporation  as  when  I  was  a  member  of  the 
Aqueduct  Board,  that  the  contractors  had  already 
been  i)aid  upon  their  iinal  estimates  all  that  they 
were  justly  entitled  to,  and  that  the  construction 
given  to  the  contract  *  *  *  for  tunnel  excava- 
tion was  the  true  legal  construction,  and  this  view 
has  been  sustained  by  the  Court  of  Appeals."  To 
this  letter  the  special  counsel,  under  date  of  De- 
cember 3,  1896,  replied:  "  We  have  at  all  times 
been  of  the  opinion,  in  which,  while  occupying  a 
place  on  the  Board  of  Aqueduct  Commissioners, 
you  concurred,  that  in  equity  and  justice  none  of 
the  claims  of  the  contractors  which  have  been  put 
in  suit  or  upon  which  demands  have  been  made 
are  valid  or  should  be  acceded  to." 

And,  in  a  letter  of  the  special  counsel  to  the 
Corporation  Counsel  under  date  of  October  25, 
1897,  referring  to  the  previous  advice  as  to  the  ad- 
visability of  a  settlement,  they  said:  "We  were 
not  influenced  in  any  considerable  degree  by  any 
opinion  or  belief  that  the  claims  of  the  contractors 
had  any  foundations  whatever  in  law,  justice 
or  equity.  Our  advice  was  founded  upon 
the  possibility  that  the  City  nught,  through 
the  chances  and  changes  of  time,  lose  the 
benefit  of  evidence  now  accessible  to  it,  or  that  the 
Legislature  might  be  induced,  under  the  pressure 
of  the  contractors,  into  some  ill-advanced  measure 
of  indulgence  toward  them.  We  regard  the  de- 
cision of  the  Court  of  Appeals  as  a  final  determina- 
tion adverse  to  all  the  claims  of  the  contractors, 
and  that  it  would  be  equally  available  against  any 
of  such  claims.  *  *  *  In  giving  our  former  ad- 
verse we  assumed  that  there  was  some  danger  of 
such  indulgence,  notwithstanding  the  entire  want 
of  justice  and  equity  in  the  claims.  *  *  *  It 
may  reasonably  be  supi)Osed  that  they  selected 
what  they  supposed  to  be  their  strongest  claims 


42 

for  active  prosecution,  but  we  do  not  regard  this  as 
a  sufficient  assurance  against  legislative  inter- 
vention   *    *    *." 

And,  in  a  letter  of  the  Corporation  Counsel  to 
the  special  counsel  under  date  of  November  17, 
1897,  he  said  :  "So  far  as  any  strictly  legal  claim 
is  concerned,  its  non-existence  has  been  determined 
by  the  Court  of  Appeals  ;  and,  if  the  I'ule  of  stare 
decisis  applied  to  the  Legislature  as  well  as  the 
courts,  there  would  be  no  reason  for  making  any 
compromise  at  all  "  ;  and,  in  a  letter  to  the  Aque- 
duct Commissioners  in  the  same  month:  "As  I 
have  repeatedly  said  to  the  members  of  your  Board, 
so  far  as  strict  legal  liability  exists  it  has  been 
authoritatively  settled  by  the  Court  of  Appeals 
that  there  is  none  such  on  the  part  of  the  City. 
The  only  justification  for  settling  at  all,  therefore, 
would  l)e  that,  upon  the  whole,  it  was  wise  for  the 
City,  as  it  would  be  wise  for  any  other  litigant,  to 
purchase  peace  by  the  payment  of  a  sum  which, 
while  it  is  considerable  in  itself,  is  very  much 
smaller  than  the  aggregate  of  the  claims  which 
have  been  asserted." 

The  property  of  the  City  cannot  be  used  to  jtre- 
vent  hostile  legislation  or  to  "purchase  peace" 
by  preventing  the  prosecution  of  claims  which  have 
no  legal  existence.  I  cannot  conceive  of  a  more 
dangerous  precedent  to  the  City  than  this  one  if 
the  other  be  affirmed,  as  it  practically  puts  the 
disposition  of  the  property  of  the  City  in  the  hands 
of  the  Corporation  Counsel. 

The  order  appealed  from  should  be  reversed  and 
the  motion  granted,  with  costs. 

Patterson,  /.,  concurred. 


APPENDIX  VI, 

July  5,  1898. 
Hon.  John  Whalen, 

Corporation  Counsel. 
Sir.— Ui^on  assuming  the  office  of  Comptroller  I 
found  a  number  of  claims  existing  in  favor  of  the 
city  which  had  been  from  time  to  time  submitted 
by  the  Department  of  Finance  to  your  prede- 
cessors for  action,  and  which  still  remain  unsettled. 

The  following  are  the  most  important  of  these  : 

Claim  for  balance  due  on  rental  of  Staten  Island 
ferries,  amounting  to  $36,969.72. 

Claim  against  the  Manhattan  Elevated  Railroad 
Company  for  ^  per  cent,  of  the  gross  receipts  of  the 
Ninth  Avenue  line  for  a  large  number  of  years 
(such  receipts  having  formerly  been  credited  to  the 
fund  known  as  the  Greenwich  Street  Elevated 
Railroad  Fund). 

Claim  against  the  Thii'd  Avenue  Railroad  Com- 
pany for  .$10,020,  for  car-license  fees. 

Claim  against  John  Rourke,  lessee  of  the  city 
property  at  Nos.  8  to  14  Chambers  street,  amount- 
ing to  $1,387.50.    ' 

Please  inform  me  what  is  the  present  status  of 
these  claims. 

Very  truly  yours. 

Bird  S.  Colek, 

Comptroller. 


July  21,  1898. 
Hon.  John  Wiialen, 

Corporation  Counsel. 

Sir.— On  July  5,  1898,  I  transmitted  to  you  a 
request  for  certain  information  in  regard  to  claims 
appearing  unpaid  on  the  books  of  the  Bureau  of 
City  Revenue  in  this  Department,  and  which  had 
been  from  time  to  time   transmitted  by  the   De- 


44 

partment  of  Finance  to  yoiir  predecessors  for  ac- 
tion by  the  Law  Department. 

On  July  20,  1898,  I  received  from  Mr.  diaries 
Blandy,  of  your  office,  the  following  letter  : 

LAW  DEPARTMENT, 

OFFICE  OF  THE  CORPORATION  COUNSEL. 

New  York,  July  19th,  1898. 

Hon.  Bird  S.  Coler, 

Comptroller. 

Sir. — I  beg  to  acknowledge  the  receipt  of  your 
favor  of  the  oth  inst.,  enquiring  as  to  the  status  of 
a  number  of  claims  existing  in  favor  of  the  City 
which  had  been  from  time  to  time  submitted  by 
the  Department  of  Finance  to  mj'  predecessors  for 
action,  and  which  you  say  still   remain   unsettled. 

The  claims  were  duly  received  by  this  Depart- 
ment for  such  legal  action  as  was  proper  and  they 
are  receiving  and  will  receive  the  same. 

If  this  office  has  occasion  to  require  further  in- 
fornuition  from  your  Department  a  communication 
to  that  effect  will  be  sent  to  it,  and  when  the  liti- 
gations are  terminated  the  Finance  Department 
will  be  made  aware  of  the  fact  in  one  or  other  of 
the  many  ways  in  which  the  attention  of  the  Fin- 
ance Department  is  usually  brought  to  such  deter- 
minations. 

Respectfully  yours, 

Chas.  Blandt, 
Acting  Corporation  Counsel. 

The  impertinence  of  this  reply  needs  no  com- 
mentary. 

If  it  is  necessary  that  the  Comptroller  should 
give  reasons  for  expecting  answers  from  the  Law 
Department  to  inquiries  in  regard  to  matters  of 
official  business,  couched  in  respectful  language, 
I  have  to  submit  for  youi-  consideration  the  fol- 
lowing fa(!ts  bearing  upon  my  letter  of  the  5th 
inst, : 


45 

First. — The  claims  refeiTed  to  have  been  in  the 
hands  of  the  Law  Department  for  so  many  years 
that  the  presumption  has  naturally  arisen  that 
some  of  these  claims,  at  least,  have  proved  to  be 
uncollectible.  If  this  is  so,  the  Department  of  Fi- 
nance should  be  informed  of  that  fact  so  that  ficti- 
tious balances  should  not  be  carried  from  year  to 
year  on  the  books  of  the  Bnreau  of  City  Revenue. 
If  the  claims  or  any  of  them  are  uncollectible,  the 
account  should  either  be  charged  oflF,  or  at  least 
carried  into  a  suspense  account.  The  interests  of 
good  bookkeeping  are  certainly  not  served  by  the 
indefinite  retention  of  these  claims  in  the  Law  De- 
partment for  a.  niimber  of  years  and  a  refusal  to 
furnish  any  information  in  regard  to  the  prospects 
of  their  collection  or  settlement. 

Secondly.— The:  Department  of  Finance  is  prop- 
erly interested  in  securing  the  information  re- 
quested, not  only  for  the  reasons  above  stated,  but 
also  because  upon  the  disposition  of  these  claims 
depends  the  conduct  of  the  officials  of  the  Bureau 
of  City  Revenue  in  collecting  amounts  claimed  by 
th^  city  to  be  due  for  years  subsequent  to  those 
covered  by  the  claims  transmitted  to  the  Law  De- 
partment. This  is  especially  true  of  such  claims  as 
that  against  the  Manhattan  Railroad  Company, 
which,  if  collectible  at  all,  is  collectible  during 
each  current  year. 

Until  I  have  knowledge  to  the  conti'ary  I  must 
assume  that  the  action  of  your  subordinate  in  re- 
fusing to  furnish  the  information  requested  will 
not  meet  vvith  the  approval  of  the  head  of  the  Law 
Department,  and  I  therefore  respectfully  renew 
my  request  for  the  information  asked  for  in  my 
letter  to  you  of  the  5th  inst. 

Respectfully, 

BlED   S.    COLER, 

Comptroller. 


46 

February  18. 1899. 
Hon.  John  Whalen, 

Corporation  Counsel. 

Sir. — On  March  28,  1890,  and  on  several  subse- 
quent dates  in  that  year,  the  Department  of  Finance 
transmitted  to  the  Law  Department  for  its  action, 
the  city's  claim  against  the  Manhattan  Railway 
Company  for  five  per  cent,  of  its  net  receipts  from 
passenger  traffic  on  the  Ninth  and  Third  avenue 
lines. 

On  June  ^^.  1894,  tlie  Court  of  Appeals  decided 
the  ensuing  litigation  in  favor  of  the  city  so  far  as 
the  city's  claim  related  to  the  net  income  from 
said  railway  on  its  Ninth  avenue  line  from  Green- 
wich street  iip  to  Sixty-first  street,  and  at  one-half 
of  five  per  cent,  from  the  latter  street  to  Eighty- 
third  street. 

In  a  communication  dated  July  19,  1898,  Mr. 
Charles  Blandy,  Acting  Corporation  Counsel, 
refused  to  give  me  any  information  in  regard  to 
the  status  of  this  claim,  and  in  a  communication  to 
you  dated  July  21,  1898,  I  renewed  my  request  for 
such  infornuition.  To  this  last  mentioned  letter  I 
received  no  reply.  • 

My  object  in  again  addi-essing  you  in  regard  to 
this  matter,  is  to  inform  you  that  since  the  litiga- 
tion referred  to,  the  Mahattan  Railway  Company 
has  made  no  payment  to  the  city  on  account  of  this 
claim  for  percentages  of  its  net  income,  and  to  sug- 
gest the  possibility  of  the  city's  claim  being  barred 
by  the  Statute  of  Limitations  in  the  event  of  the 
Liiw  Department  having-  failed  to  begin  another 
action  against  said  company  for  percentages  accru- 
ing since  the  dates  mentioned  in  the  complaint  in 
the  original  action. 

Very  truly  yours, 
(Signed)  Bird  S.  Colek, 

Comptroller. 


47 

(Copy.) 

LAW  DEPARTMENT. 

OFFICE  OF  THE  CORPOEATION  COUNSEL. 

New  York,  March  2nd,  1899. 

Hon.  Bird  S.  Coler, 

Comptroller. 

Sir. — I  am  in  receipt  of  your  communication 
bearing  date  18  February,  stating  that  on  March 
28,  1890,  and  on  several  subsequent  dates  in  that 
year.  The  Department  of  Finance  transmitted  to 
the  Law  Department  for  its  action  the  City's  claim 
against  the  Manhattan  Railway  Company  for  live 
per  cent,  of  its  net  receipts  from  passenger  traffic 
on  the  Ninth  and  Third  avenue  lines. 

You  state  that  on  June  5,  1894,  the  Court  of  Ap- 
peals decided  the  ensuing  litigation  in  favor  of  the 
City  so  far  as  the  City's  claim  related  to  the  net 
income  from  said  railway  on  its  Ninth  avenue  line 
from  Greenwich  street  up  to  Sixty-lirst  street  and 
at  one-half  of  live  per  cent,  from  the  latter  street  to 
Eighty-third  street. 

You  further  state  that  in  a  communication, 
dated  July  19,  1898,  Mr.  Charles  Blandy,  Acting 
Corporation  Counsel  refused  to  give  you  any  infor- 
mation in  regard  to  the  status  of  this  claim,  and 
that  in  a  conununication  to  me,  dated  July  21, 
1898  you  renewed  your  request  for  such  information. 

You  further  state  that  your  object  in  again  ad- 
dressing me  in  regard  to  the  matter  is  to  inform 
me  that  since  the  litigation  referred  to,  the  Man- 
hattan Railway  Comjiany  has  made  no  payment  to 
the  City  on  account  of  its  claim  for  percentages  of 
its  net  income,  and  to  suggest  the  possibility  of  the 
City's  claim  being  barred  by  tlie  Statute  of  Limi- 
tations in  the  event  of  this  department  having  failed 
to  begin  another  action  against  said  company  for 
percentage  accruing  since  the  dates  mentioned  in 
the  complaint  in  the  original  action. 


48 

I  take  due  note  of  your  statement  that  the  Man- 
hattan Railway  Coiiii)any  lias  not  paid  any  per- 
centage since  the  institution  of  the  suit  in  ques- 
tion, and  I  will  cause  an  examination  of  the  situa- 
tion to  be  made  with  a  view  of  l)ringing  a  suit,  or 
suits,  to  enforce  the  rights  of  the  City  as  defined  in 
the  very  unsatisfactory  decision  of  the  Court  of 
Appeals,  a  decision  which  in  the  dissenting  opin- 
ion of  Judge  Bartlett  is  rightly  called  "  a  very 
great  injustice  to  The  City  of  New  York." 

I  do  not  imagine  that  you  desire  any  detailed 
information  as  to  proceedings  had  in  this  case,  but 
wish  to  ascertain  merely  the  ]n'obability  of  pay- 
ment by  the  company. 

I  will  state  generally  that  I  have  made  an  in- 
vestigation as  to  the  condition  of  the  action  which, 
as  you  know,  was  brought  by  one  of  my  predeces- 
sors, and  I  Hud  that  condition  to  be  as  follows  : 

The  suit  was  in  the  hands  of  the  late  David  J. 
Dean,  and  in  its  earlier  stages  in  that  of  Mr.  John 
H.  Strahan,  who  tried  the  case  at  Special  Term. 

Both  Mr.  Strahan  and  Mr.  Dean  are  dead,  and 
their  deaths  make  it  very  difficult  at  this  time  to 
obtain  information,  of  which  they  were  j)0ssessed, 
in  reference  to  this  case,  for  there  are  matters 
which  do  not  appear  of  record,  of  considerable  im- 
portance. 

Upon  my  attention  being  called  to  the  fact  of  the 
pendency  of  the  action,  an  attempt  was  made  to 
negotiate  with  the  counsel  to  the  Manhattan  Rail- 
way Company,  Mr.  Julien  T.  Davies,  to  shorten 
what  will  be,  in  any  event,  a  very  prolonged  trial, 
by  agreeing  upon  the  facts  relevant  to  the  case  as 
left  by  tile  decision  of  the  Court  of  Appeals. 

If  a  formal  second  trial  could  be  avoided,  except 
iijion  stipulated  facts,  it  would  very  much  abbre- 
viate the  proceedings  without,  I  think,  doing  in- 
justice to  either  side. 

Mr.  Davies  promised  to  take    the    voluminous 


49 

paiiers  on  appeal  anrl  to  read  them  througii,  and  to 
then  see  if  he  coiikl  agree  with  this  office  as  to  a 
method  of  procedure. 

Since  this,  however,  nothing  lias  been  done  ow- 
ing to  Mr.  Davies'  engagements,  and  to  tlie  very 
great  press  of  business  upon  this  office  inciden- 
tal to  the  creation  and  administration  of  the 
New  City. 

It  has  so  far  been  found  impossible  for  any  one 
in  the  office  to  give  the  necessary  time  to  the  i)rep- 
aration  for  the  examination  of  the  accoixnts  of 
this  road,  although  some  effort  has  been  made 
to  find  a  competent  person  thoroughly  acquainted 
witli  railway  accounts  from  wliom  expert  aid  in 
the  case  could  be  obtained. 

The  situation  apparently  is,  at  this  time,  that 
the  case  must  be  retried  in  all  its  details  so  far  as 
it  relates  to  the  Ninth  and  not  the  Third  avenue 
road. 

A  reference  will  then  be  ordered  by  the  Court 
and  a  new  referee  appointed  in  the  place  of  the 
former  referee,  who  is  dead. 

All  this  will  be  done  as  soon  as  is  possible,  al- 
though it  is  a  task  very  much  beyond  what  you 
would  suppose  it  to  be  from  a  mere  examination  of 
the  papers,  and  I  will,  as  I  have  already  said,  pre- 
pare to  institute  such  suits  as  may  be  necessary. 

As  to  the  possible  loss  V)y  claims  being  barred  by 
the  statute  of  limitations,  that  is  something  for 
which  I  must  decline  to  be  held  responsible,  if 
caused  by  the  non-action  of  any  of  juy  predeces- 
sors. 

It  is  one  of  the  penalties  which  the  city  must 
pay  for  the  frequent  change  of  its  ofhcials  at  the 
head  of  the  depai'tments  that  the  knowledge  of  the 
officer  is  not  transmitted  to  his  successor,  except  as 
to  matters  which  are  of  record  in  the  office,  and, 
therefore,  there  are  many  matters  of  importance 
not  called  to  the  attention  of  the  head  of  a  depart- 
ment in  time  to  take  seasonal)le  action  thereon. 


so 

I  may  add  that  I  am  informed  that  Mr.  Dean  re- 
garded the  decision  of  the  Court  of  Appeals  as  a 
very  barren  victory  for   the   city   from   which   we 
would  obtain  but  little  in  the  way  of  money. 
Yours, 

John  Whalen, 

Corporation  Counsel. 


51 

APPENDIX  VII, 

CITY  OF   NEW   YOKK, 

finance  department, 

Comptroller's  Office. 

May  25,  1899. 
Hon.  John  Whalen, 

Corporation  Counsel. 

Sir. — I  acknowledge  receipt  of  your  letter  of  the 
12tli  Inst,  returning  the  transcript  of  judgment 
against  the  city,  for  $549.49,  in  favor  of  Henrietta 
A.  Mittnach  and  E.  Hastings. 

You  state  that  there  being  no  defence  to  this  ac- 
tion you  oflFered  judgment,  and  that  "the  judg- 
ment was  therefore  pro^terly  obtained  and  is  a  legal 
charge  against  the  treasury." 

It  seems  that  you  must  have  been  misinformed 
about  this  matter. 

On  September  8,  1898  the  Commissioner  of  Pub- 
lic Buildings,  Lighting  and  Supplies,  ordered  from 
Mittnach' s  Eagle  Safe  Co.  a  safe  of  certain  speci- 
fied dimensions  and  twelve  name  plates.  The  or- 
der does  not  specify  any  price,  nor  does  it  appeal- 
that  any  agreement  as  to  price  was  ever  entered 
into  between  the  Company  and  the  Department. 
In  case  of  an  excessive  charge  it  would,  therefore, 
beperfectly  proper  for  the  auditor  to  refuse  to  audit 
the  bill  and  entirely  competent  for  the  city  in  case 
of  litigation  to  prove  the  just  value  of  the  articles 
furnished. 

The  Insjiector  of  the  Auditing  Bureau  in  the 
Borough  of  Brooklyn,  who  passed  on  this  bill,  re- 
ported the  charge  as  excessive  and  the  Auditor  de- 
clined to  audit  the  bill  at  any  greater  amount  (for 
the  safe — the  name  plates  being  only  $12.00  in  all) 
than  $300. 

The  Department  of  Public  Buildings,  Lighting 
and  Supplies  having  insisted  that  the  price  was 


52 

reasonable,  1  secured  fi'om  an  impartial  expert  in 
the  safe  business  of  more  tlian  twenty  years  stand- 
ing, a  report  dated  March  6,  1899,  who  after  re- 
porting that  the  casting  sheet  was  broken  and 
alluding  to  other  defects  reported  that  a  fair  and 
true  valuation  of  this  safe  would  be  8350. 

A  suit  having  been  begun.  Mr.  McKinny  received 
a  letter  from  Assistant  Corporation  Counsel,  John 
J.  Walsh,  dated  March  27.  1899.  requesting  in- 
formation. 

In  reply  Mr.  McKinny  sent  a  communication  to 
Mr.  Walsh,  dated  March  30,  1899,  referring  in  sub- 
stance to  the  facts  on  which  the  Department  of 
Finance  contested  this  claim. 

The  next  information  in  regai'd  to  the  matter  re- 
ceived by  my  department  was  the  receipt  of  the 
transcript  of  judgment. 

I  submit  that  quite  apart  from  the  controversy 
which  has  existed  between  our  respective  depart- 
ments as  to  the  right  of  the  Corporation  Counsel  to 
settle  claims  against  the  city  by  offers  of  judg- 
ments, this  cannot  be  regarded,  in  any  event,  as  a 
proper  case  for  the  giving  awaj'  of  the  City's  rights. 
The  Department  of  Finance  maintains  a  corps  of 
inspectors  whose  duty  is  largely  to  report  on  the 
market  value  of  goods  furnished  to  the  city. 
Where  no  agreement  as  to  price  is  entered  into  it 
is  certainly  competent  for  the  city  to  defend  on  the 
ground  that  the  price  charged  is  excessive. 

That  this  was  true  in  this  case  my  office  stood 
ready  to  prove  in  Court. 

To  make  the  City's  case  stronger,  a  report  of  an 
expert  was  secured  at  considerable  expense  and 
that  expert  was  also  prepared  to  testify  in  Court. 
•  I  cannot  assume  that  in  such  cases  as  this  you 
propose  to  wholly  disregard  the  reports  of  the  ex- 
perts connected  with  or  employed  by  the  auditing 
department  of  the  city  government,  and  to  take 
for  granted  any  claim,  not  on  its  face  fraudulent, 
that  may  be  presented  against  the  city.  For  this 
reason,  as  I  stated  above,  I  prefer  to  believe  that 


53 

you  have  been  misinformed  in  regard  to  this  claim, 
or  that  the  facts  in  regard  to  the  city's  defence 
were  not  brought  to  your  attention. 

One  of  my  objects  in  addressing  you  at  length  in 
regard  to  this  matter  is  that  the  same  claimants 
have  presented  to  this  ofBce  a  large  number  of 
similar  bills  against  the  same  Department  which 
the  Auditors  have  declined  to  audit  on  the  same 
ground — that  the  charges  are  excessive — in  some 
cases  outrageously  so.  I  have  reason  to  believe 
that  the  mere  interposition  of  a  defense  to  the 
actions  that  may  be  brought  will  result  in  the 
claimants  accepting  in  full  satisfaction  ])ayments 
in  amounts  considerably  less  than  the  face  of  their 
claims.  In  the  event  of  these  actions  going  to 
trial,  however,  I  have  secured  expert  testimony 
which  cannot,  in  my  opinion,  fail  to  sustain  the 
contention  of  the  several  Auditors  and  Inspectors, 
who  in  thoroughly  independent  examinations  have 
reached  the  same  conclusions  in  regard  to  these 
claims. 

Respectfully, 
(Signed)    Bird  S.  Coler, 
Comptroller. 


54 

CITY  OF  NEW  YOEK 

department  of  fixance 

comptroller's  office. 

October  23,  1899. 

Hon.  John  Whalen, 

Corporation  Counsel. 

Sir. — I  have  received  your  communication  of  the 
19th  inst.,  in  regard  to  certain  actions  brought 
against  the  City  of  Xew  York  to  recover  the  sums 
ofsoOO.OO,  84aO.()0.  S650.00.  $290.00.  S503.00,  re- 
spectively, for  safes  furnished  by  Mittnacht's  Eagle 
Safe  Company  upon  orders  of  the  Commissioner  of 
Public  Buildings,  Lighting  and  Supplies. 

You  state  that,  in  your  opinion,  no  sufficient  de- 
fense to  these  actions  exists  and  that  unless  I 
furnish  you.  within  ;five  days,  with  sufficient  in- 
formation to  eiiable  you  to  defend  these  actions 
you  will  offer  judgments  for  the  amounts  de- 
manded. 

In  your  letter  you  state  that  the  only  defense 
must  be  placed  on  the  ground  of  fraud  ;  and  that, 
as  you  do  not  understand  me  to  allege  fraud  on 
the  part  of  the  Commissioner  of  Public  Buildings, , 
Lighting  and  Supplies,  you  are  aware  of  no  de- 
fense and  are  not  willing  to  subject  the  City  to  the 
almost  inevitable  imposition  of  costs. 

Am  I  to  understand  you  that  the  only  fraud 
which  would  be  available  as  a  defense  would  be 
such  fraud  as  resulted  from  a  conspiiacy  in  which 
the  Commissioner  of  Public  Buildings,  Lighting 
and  Supplies  was  a  party  ?  If  so,  you  correctly 
understand  me  as  not  imputing  fraud  of  this  kind, 
as  I  have  no  knowledge  upon  which  to  base  such 
an  allegation  and,  from  what  I  know  of  the  char- 
acter of  the  head  of  that  Department.  I  do  not  be- 
lieve he  would  be  guilty  of  any  such  reprehensible 
conduct. 

I  do  believe,  however,  that  the  Commissioner  of 


55 

Public  Buildings,  Ligiitino-  and  Supplies  has  been 
imposed  upon  by  one  or  more  of  his  subordinates, 
and  that  there  has  been  fraud  in  this  matter,  of 
which  the  City  of  New  York  is  to  be  a  victim.  I 
entertain  no  doubt  whatever,  nor  do  I  think  any 
reasonable  man  could  doubt  that  such  a  state  of 
affairs  exists,  after  reading  the  evidence  on  file  in 
this  department. 

This  evidence  does  not,  as  you  state  in  your 
letter,  merely  indicate  that  better  safes  than  those 
furnished  could  be  procured  at  lower  prices  ;  but, 
rather,  shows  that  deliberate  and  systematic  effort 
has  been  made  to  defraud  the  city. 

In  regard  to  the  claim  for  1500.00,  based  on 
order  No.  73  of  the  Department  of  Public  Build- 
ings, Lighting  and  Supplies,  dated  October  21st, 
1898,  the  facts  are  that  this  safe  was  manufactured 
by  the  Diebold  Safe  and  Lock  Company  of  Canton, 
Ohio,  bearing  the  stock  number  86,223,  the  list 
price  of  which,  on  the  manufacturers'  catalogue, 
is  $395.00,  from  which,  however,  according  to  busi- 
ness usage,  a  commission  of  twenty-five  per  cent. 
^^25;?)  is  paid  to  agents,  so  that,  after  allowing  a 
reasonable  profit  to  the  Mittnacht  Company,  which 
simply  acted  as  a  middleman,  a  fair  valuation 
would  be  $350.00. 

In  regard  to  the  claim  for  $503.00,  based  on  the 
requisition  of  the  Department  of  Public  Buildings, 
Lighting  and  Supplies,  dated  November  23rd,  1898, 
it  appears  that  this  safe  was  also  manufactured  by 
the  Diebold  Safe  and  Lock  Company,  bearing  the 
stock  number  86,171,  and  the  same  conclusions  are 
to  be  reached. 

In  regard  to  the  claim  for  $650.00,  this  is  made 
up  of  the  following  items  : 

For  one  folding  door  Marvin  safe,  $150.00.  This 
safe  is  second  hand,  and  is  an  old  style  Marvin, 
more  than  forty  years  old,  not  lire  jjroof  and  prac- 
tically valueless. 

I  leave  it  to  you  to  decide,  as  a  matter  of  law. 


56 

whether  the  order  of  the  Department  (which  says 
nothing  about  second  hand  material),  has  been 
complied  with  by  the  delivery  of  an  antique  cxiri- 
osity  of  this  kind. 

The  balance  of  this  claim  is  based  upon  an  order 
for  two  safes  of  different  dimensions,  lumped  to- 
gether, however,  for  the  sum  of  s500.00. 

One  ot  these  safes  was  manufactured  by  the  Die- 
bold  Safe  and  Lock  Company  of  Canton,  Ohio, 
bearing  the  stock  number  77,278  and,  comparing 
■with  their  published  catalogue  Xo.  36,  is  found  to 
be  at  least  ten  years  old  and  worth,  at  the  outside, 
$160.00.    It  was  second  hand  when  delivered. 

The  second  safe  is  of  cheap  Western  manufacture, 
made  of  hoop  and  piece  front  construction,  with- 
out solid  angles,  not  tire  proof  nor  burglar  proof,  and 
worth  the  value  of  scrap  iron. 

In  regard  to  the  claim  for  §290.00,  this  safe  was 
manufactured  by  the  Hall  Safe  Company  of  Cin- 
cinnati. Ohio,  has  thin  walls,  is  not  fire  proof,  and 
can  readily  be  shown  to  be  worth  not  more  than 
$•225.00  or,  gt  the  outside,  S250.00. 

In  regard  to  the  claim  for  S4;")().()i).  this  is  based 
on  a  safe  delivered  to  the  Department  of  Health  in 
the  Borough  of  Manhattan,  on  the  order  of  the 
Department  of  Public  Buildings,  Lighting  and 
Supplies,  dated  December  30th,  1898.  I  have  not 
at  liand  a  detailed  description  of  this  safe,  but  an 
expert  report  made  to  me  orally  shows  the  fair 
value  thereof  to  be  S375.00. 

In  the  case  of  all  these  safes,  except  the  one  last 
mentioned,  I  have  secured,  in  addition  to  the  usual 
reports  lof  my  inspectors,  reports  by  an  expert  of 
twenty  years  standing  in  the  safe  business. 

This  gentleman  is  perfectly  willing  on  the  wit- 
ness stand  to  substantiate  the  facts  already  re- 
ported to  me  in  writing,  and  his  services  are  at 
your  disposal. 

It  is  my  desire,  and  I  respectf  iilh'  request  you  to 
defend  these  actions  on  behalf  of  the  Citv,  and  in 


57 

this  connection  I  be"'  to  call  your  nttpntion  to  the 
following  facts : 

Fraud  rarely  proves   itself  ;    but  is  often  made 
easily  discoverable  in  the  course  of  legal  proceed 
ings. 

The  facts  in  the  possession  of  this  Department  in 
regard  to  these  claims  to  which  your  attention  has 
in  part  been  called,  are  such  as  to  lead  any  hon- 
estly fair-minded  public  officer  to  believe  that  fraud 
exists. 

The  eliciting  of  further  evidence  lies  within  your 
power  ;  it  is  outside  of  mine. 

The  Comptroller's  examinations  taken  bj'  your 
office  under  Section  149  of  the  Charter  in  my  be- 
half— so  far  as  they  have  been  brought  to  my  at- 
tention— have  been  altogether  inadequaete  and  read 
more  like  an  attempt  to  prove  the  claimants'  case 
than  to  elicit  those  elements  in  the  case  that  might 
be  favorable  to  the  City. 

I  sincerely  hope  that,  after  a  consideration  of  the 
facts  stated  above,  you  will  see  your  way  clear  to 
comply  with  the  reqnest  of  the  auditing  branch  of 
the  City  government  to  defend  these  actions  ;  since, 
otherwise,  i  shall  consider  it  my  duty  to  make 
jniblic  what  I  regard  as  a  scandalous  attempt  to 
swindle  the  City  treasury  and  shall  do  all  in  my 
power  to  aid  in  the  taxpayers'  action  which  I  have 
reason  to  believe  will  certainly  be  brought. 
Very  truly  yours, 
(Signed)  Bird  S.  Coleh, 

Comptroller. 


i 


